Westgold Resources NL v St Barbara Mines Ltd
[2002] WASC 264
WESTGOLD RESOURCES NL -v- ST BARBARA MINES LTD & ANOR [2002] WASC 264
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 264 | |
| Case No: | CIV:2427/2000 | 3 OCTOBER 2002 | |
| Coram: | EM HEENAN J | 15/11/02 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Injunction granted with possibility of limited duration | ||
| A | |||
| PDF Version |
| Parties: | WESTGOLD RESOURCES NL (ACN 009 260 306) ST BARBARA MINES LTD (ACN 009 165 066) RONALD WARREN WOSS NORMAN THOMAS BEVAN PETER VERNON JONES ROBIN STEPHEN DEAN AMERICAN HOME ASSURANCE COMPANY |
Catchwords: | Legal practitioners Injunction to restrain solicitor from acting against former client Alleged conflict of duty and interest Confidential documents lost or misplaced while in possession of former solicitor Injunction granted in limited terms |
Legislation: | Nil |
Case References: | Black v Taylor [1993] 3 NZLR 403 Bolkiah (Prince Jefri) v KPMG (a firm) [1999] 2 AC 222 Clay v Karlson (1997) 17 WAR 493 Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 Fraser v Evans [1969] 1 QB 349 G v Day [1982] 1 NSWLR 24 Grimwade v Meagher [1995] 1 VR 446 Maguire v Makaronis (1997) 188 CLR 449 Mense v Milenkovic [1973] VR 784 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 Newman v Phillips Fox (1999) 21 WAR 309 Nocton v Lord Ashburton [1914] AC 932 Oceanic Life Ltd v HIH Casualty and General Insurance Limited (1999) 10 ANZ Ins Cas 61-438 Parry-Jones v Law Society [1969] 1 Ch 1 Prebble v Reeves [1910] VLR 88 Seager v Copydex (No 1) [1967] 2 All ER 415 Smith Kline & French Laboratories (Aust) Limited v Secretary, Department of Community Services & Health (1990) 22 FCR 73 Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 17 WAR 98 Afkos Industries Pty Ltd v Pullinger Stewart (A firm) [2001] WASCA 372 MacDonald Estate v Martin (1991) 77 DLR (4th) 249 Re a Firm of Solicitors [1992] QB 959 Re LPO Transact Pty Ltd (In liq); Williamson v Nilant [2002] WASC 225 Western Australia v Ward (1997) 76 FCR 492 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ST BARBARA MINES LTD (ACN 009 165 066)
First Defendant
RONALD WARREN WOSS
Second Defendant
NORMAN THOMAS BEVAN
First Third Party
PETER VERNON JONES
Second Third Party
ROBIN STEPHEN DEAN
Third Third Party
AMERICAN HOME ASSURANCE COMPANY
Fourth Third Party
(Page 2)
Catchwords:
Legal practitioners - Injunction to restrain solicitor from acting against former client - Alleged conflict of duty and interest - Confidential documents lost or misplaced while in possession of former solicitor - Injunction granted in limited terms
Legislation:
Nil
Result:
Injunction granted with possibility of limited duration
Category: A
Representation:
Counsel:
Plaintiff : Mr A N Siopis
First Defendant : Mr M J McCusker QC
Second Defendant : No appearance
First Third Party : No appearance
Second Third Party : No appearance
Third Third Party : No appearance
Fourth Third Party : No appearance
Solicitors:
Plaintiff : Corrs Chambers Westgarth
First Defendant : Tottle Christensen
Second Defendant : No appearance
First Third Party : No appearance
Second Third Party : No appearance
Third Third Party : No appearance
Fourth Third Party : No appearance
(Page 3)
Case(s) referred to in judgment(s):
Black v Taylor [1993] 3 NZLR 403
Bolkiah (Prince Jefri) v KPMG (a firm) [1999] 2 AC 222
Clay v Karlson (1997) 17 WAR 493
Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39
Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167
Fraser v Evans [1969] 1 QB 349
G v Day [1982] 1 NSWLR 24
Grimwade v Meagher [1995] 1 VR 446
Maguire v Makaronis (1997) 188 CLR 449
Mense v Milenkovic [1973] VR 784
Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414
Newman v Phillips Fox (1999) 21 WAR 309
Nocton v Lord Ashburton [1914] AC 932
Oceanic Life Ltd v HIH Casualty and General Insurance Limited (1999) 10 ANZ Ins Cas 61-438
Parry-Jones v Law Society [1969] 1 Ch 1
Prebble v Reeves [1910] VLR 88
Seager v Copydex (No 1) [1967] 2 All ER 415
Smith Kline & French Laboratories (Aust) Limited v Secretary, Department of Community Services & Health (1990) 22 FCR 73
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 17 WAR 98
Case(s) also cited:
Afkos Industries Pty Ltd v Pullinger Stewart (A firm) [2001] WASCA 372
MacDonald Estate v Martin (1991) 77 DLR (4th) 249
Re a Firm of Solicitors [1992] QB 959
Re LPO Transact Pty Ltd (In liq); Williamson v Nilant [2002] WASC 225
Western Australia v Ward (1997) 76 FCR 492
(Page 4)
1 EM HEENAN J: This application by the plaintiff, Westgold Resources Ltd (Westgold), by summons dated 9 August 2002, is for an injunction to restrain the first defendant, St Barbara Mines Ltd (St Barbara), from continuing to retain its newly appointed solicitors, Messrs Tottle Christensen, or Mr Paul Blackman, a partner in that firm, in these proceedings or to act as counsel. The grounds of the application by the plaintiff, as outlined in written submissions and developed in oral argument, are that the present solicitors for St Barbara have received information and privileged communications confidential to the plaintiff as a result of previous dealings and that for the present solicitors to continue to act would involve an actual or potential misuse of that confidential information and a risk of its disclosure to the first defendant or to other parties with interests adverse to the plaintiff.
2 Westgold also submits that to permit St Barbara to retain its present solicitors would, in the circumstances, create a perception of unfairness so that the Court should exercise its inherent power to control the conduct of its officers in order to preserve public confidence in the integrity and fairness of the administration of justice. As these submissions were developed in argument it also became apparent that the plaintiff was, of necessity, although by implication, also contending that, for the present solicitors to continue to act for the first defendant, would involve them being placed, actually or potentially, in a position where there would be a conflict of duty and also a conflict of interest. These consequences, so it was submitted, all derive from the former role of Mr Paul Blackman, when a partner in another firm of solicitors, Messrs Clayton Utz, where he was acting for Mr Roderick Smith, a former director and employee of the plaintiff. It is submitted by Westgold that, because of his role in acting for Mr Smith while at Clayton Utz, Mr Blackman, now a partner of Tottle Christensen, may not now act for the first defendant. The submission also involves the proposition that other partners at Tottle Christensen and its employees may not act in that capacity either.
3 There is no evidence to suggest, nor have any submissions been made to the effect, that any conduct of St Barbara prevents it from being represented by the solicitors of its choice. Rather it is the past involvement of an individual member of its new firm of solicitors which is relied upon for the disqualifying grounds. Furthermore, the specific relief sought by the plaintiff in its chamber summons seeks orders against Tottle Christensen and Mr Paul Blackman for the delivery up of certain documents and for that firm to pay the plaintiff's costs of this application.
(Page 5)
4 This raises a question about the need for Tottle Christensen or Mr Blackman to be joined as parties in this action in order for this application to be dealt with. Because it is the conduct of that firm which is sought to be restricted, and because the plaintiff specifically invokes the jurisdiction of the court over its own officers, this question arises. A similar issue was dealt with by Templeman J in Clay v Karlson (1997) 17 WAR 493 at 497. In that case his Honour concluded that, as the substance of the relief sought by the applicant was an injunction to restrain a particular firm of solicitors from acting, it was necessary for them to be subject to the jurisdiction of the court. This is ordinarily achieved by having the person or persons who are to be subject to the orders of the court made parties in the action but, where they are solicitors on the record, they are, at the one time, officers of the court and subject to the direct control of the court, so that orders may be made regulating their conduct. While this may be done, it is still necessary to ensure that the solicitors concerned have an opportunity to be heard on their own account, if necessary by separate representation, and that their client, in this case St Barbara, has an opportunity to present its own case if this involves any issues additional to or different from those affecting the position of the solicitors. Once this question arose in the present proceedings, counsel for the plaintiff sought an adjournment in order to apply to join Messrs Tottle Christensen as parties to the action or at least to allow him the opportunity to consider whether joinder would be necessary. However, for obvious reasons and commendably, Messrs Tottle Christensen provided instructions to counsel for the first defendant who informed the court that Tottle Christensen would abide by any order which the court might make without any need for them to be joined. They did not wish to add, on their own behalf, to the submissions which by then had been made for the first defendant. Counsel for the first defendant also informed the court that his client was content to proceed on this basis. For those reasons, therefore, I consider it is not necessary that Messrs Tottle Christensen formally be joined as parties because, as officers of the court and solicitors on the record for St Barbara, they are submitting to any orders which may be made without the need for joinder.
5 To appreciate the reasons relied on by the plaintiff to prevent Messrs Tottle Christensen continuing to act for the first defendant, it is necessary to describe the nature of this litigation and other related background. Westgold commenced the present action by a specially indorsed writ of summons against the first and second defendants issued on 20 October 2000. Essentially, Westgold alleges that it purchased shares in St Barbara from the second defendant, Woss, for some $7.22 million as a result of
(Page 6)
- alleged material non-disclosures and because of misleading or deceptive conduct by the first defendant. Westgold asserts that a duty of disclosure was owed by St Barbara pursuant to s 1001A(2) of the Corporations Law and that the misleading or deceptive conduct contravenes s 995(2) of the Law. It also asserts that the second defendant was involved in those alleged contraventions. Westgold complains that, as a result of its purchase of the Woss shares it has suffered loss and damage of $6.23 million or other losses and seeks to recover these damages from the two defendants together with interest. The alleged material non-disclosures and misleading or deceptive conduct relied upon by Westgold concern information which it is claimed should have been or was available to the defendants, at the material time, concerning the results of drilling programmes on the Cuddingwarra gold field together with details of mining costs for the recovery of gold bearing ore discovered in that field.
6 At the date of the commencement of these proceedings Mr Roderick James Hollas Smith was a director and the executive chairman of Westgold. In that capacity he assisted Westgold in relation to its defence of this action. He prepared a number of documents and received, via email, a number of other documents relating to the legal advice and evidence being assembled by Westgold for this action. These documents and communications were, as a matter of routine, automatically stored electronically on his computer server. There is unchallenged evidence that Westgold had engaged a specialist litigation management consultancy, McLernon Group Limited, for the management of the litigation and McLernon Group Limited reported to, and received instructions from, Mr Roderick Smith. In this role Mr Smith prepared confidential documents for the purpose of engaging in communications with the legal representatives of Westgold, including its senior counsel.
7 Corrs Chambers Westgarth are the solicitors who have been acting for Westgold, from the commencement of this action, and who are continuing to act. Messrs Minter Ellison had entered an appearance as solicitors on the record for St Barbara and continued to act for St Barbara until it recently appointed its new solicitors, Tottle Christensen, on 29 July 2002. It is this development which has triggered this application. Freehills are the solicitors who entered an appearance for the second defendant and who continue to act for Mr Woss. While the interests of St Barbara and Mr Woss may not be precisely the same there is a large degree of common interest between them in opposing the plaintiff's claims.
(Page 7)
8 By December 2000 an acrimonious dispute had arisen between Mr Roderick Smith and Westgold. This led to him relinquishing the posts of director and executive chairman and his employment by Westgold was terminated. There was then separate litigation between Westgold and Mr Smith which resulted in Smith engaging the firm Clayton Utz to act as his solicitors to defend the claims being made against him by Westgold. Mr Paul Blackman was the partner at Clayton Utz who directly advised Mr Smith in relation to those proceedings. That action remained on foot from December 2000 until late July 2002 when it was resolved on terms agreed by the parties. It is not suggested that anything arising from his role in acting in relation to this employment dispute between Westgold and Mr Smith prevents or inhibits Mr Blackman from acting for St Barbara in the present action. However, in January 2001, after the break between Smith and Westgold, Mr Ron Woss telephoned Smith and asked for a meeting. A meeting subsequently took place between Smith, Woss and Mr Woss' son during January 2001. Mr Smith has deposed to discussing the fact that both he and Woss were defendants in proceedings brought against them by Westgold and that he informed Mr Woss that he may have some documents relevant to the latter's case but that he, Smith, could not discuss the case or provide any documents to Woss. There was a second meeting between Smith and Woss in or about May 2000 when Woss told Smith that he was going through the process of discovery in the present action and asked Smith whether he, Smith, had any discoverable documents relating to the present action. The response of Smith was to inform Woss that he should write to Smith's solicitors, Clayton Utz, who would respond on his behalf. Freehills, acting for Woss, wrote to Clayton Utz by letter dated 2 April 2002, advising that they had been instructed that Smith had in his possession documents relevant to the issues in dispute in the current proceedings and requesting access to those documents. On receipt of this letter Mr Blackman immediately wrote to Mr Smith requesting him to telephone to discuss the Freehills' approach.
9 The documents to which Smith was alluding were copies of the materials which he had received, prepared or accumulated whilst a director of Westgold and when preparing for, or participating in, the company's defence of the present action. These were contained in the electronic storage of his computer server. Smith duly telephoned Blackman and, in the course of that conversation, Blackman asked for copies of the document so that he could advise Smith about his position. Smith made copies of all the documents he could locate in his possession relating to Woss, most of which he found by searching his computer hard disk, and sent them to Mr Blackman at Clayton Utz. Those documents
(Page 8)
- were received by Clayton Utz under cover of a letter from Mr Smith dated 30 April 2002. The documents included communications between Mr Smith, acting as a director of Westgold, and Westgold's solicitors in this present litigation. They also included communications with the plaintiff's senior counsel.
10 Despite asking to see these documents in order to provide advice to Smith, Mr Blackman did not in fact ever read them. The A4 folder containing the documents was received by Mr Blackman but, evidently soon after its receipt, was misplaced and has not yet been found. Its current whereabouts are unknown although the probabilities are that it has been misplaced or misfiled somewhere at Clayton Utz and is still there, although other possibilities cannot be entirely excluded.
11 Nevertheless, on 5 June 2000, Mr Blackman advised Smith by telephone about the Freehills request for the documents. Blackman's advice to Smith was that he should not provide the documents to Freehills as they had come into Smith's possession in his capacity as a director of Westgold. Smith accepted this advice. There was then a telephone conversation between Mr Blackman, on behalf of Smith, and Mr Steven Penglis of Freehills who was acting for Woss. Blackman told Mr Woss' solicitor that Smith had in his possession documents relevant to the present action but that he had received them in his capacity as a director of the plaintiff and would not volunteer production of those documents. That information was conveyed by Blackman to Penglis by telephone on 7 June 2002. Between 7 June 2002 and 29 July 2002 Mr Blackman retired as a partner of Clayton Utz and became a partner at the firm of Tottle Christensen. Tottle Christensen became the solicitors on the record for the defendant St Barbara, in the place of the first defendant's previous solicitors, Minter Ellison, on 29 July 2002 as earlier noted. As a partner in Tottle Christensen Mr Blackman will share in the responsibility of advising and representing St Barbara in these proceedings.
12 In the meanwhile, being apprised of the existence of documents material to the action believed to be in the possession of Smith, Mr Woss' solicitors, Freehills, brought an application against Smith for non-party discovery pursuant to O 26A of the Rules of the Supreme Court. This immediately came to the attention of the solicitors for Westgold who, realising that any papers held by Smith must have come to him in his capacity as a director of Westgold, wrote to Smith demanding the return of all the documents and full disclosure of any discussions which Smith may have had with Woss or others about St Barbara's claim.
(Page 9)
13 The solicitors for Westgold also issued fresh proceedings against Smith (CIV 2061 of 2002) seeking delivery up of all documents relating to Westgold's litigation which had come to Smith while he was a director and employee of the company. This initiative resulted in Smith delivering up to the solicitors for Westgold all the papers and records which he possessed relating to Westgold's position in the current litigation and making acceptable arrangements to erase or to deliver Smith's computer records which contained this information. The disclosure of these documents to Westgold's solicitors, enabled them to oppose the Woss/Freehills' application for non-party discovery against Smith on the grounds that the subject matter comprised documents which were privileged, having been created for the purpose of seeking legal advice or, otherwise, were documents which had come into the possession of Smith in his role as a director of Westgold. There also exist other documents received from Smith, which were neither confidential nor privileged and which have been disclosed. These are not, in any way, material to the present issues. For obvious reasons, the documents so delivered up by Smith to Westgold did not include any of the copies which Smith had made and which he had sent to Mr Blackman at Clayton Utz on 30 April 2002. So far as Smith, Blackman and Clayton Utz were aware these documents remained lost among the records at Clayton Utz.
14 This application has been argued upon the assumption, common to both sides, that the information contained in the documents provided by Mr Smith to Clayton Utz was confidential and that both he and Clayton Utz were under an obligation to keep it confidential and not to disclose it, without the authority of Westgold, to any person but the plaintiff. It is also acknowledged that, if it were possible to locate the missing documents, Clayton Utz would be under an obligation to ensure that they were returned to the plaintiff, Westgold, if possible with the approval and at the direction of Mr Smith. But, if for any reason Smith would not confer upon his former solicitors authority to act in this way, that the documents should be preserved in the possession of Clayton Utz and kept confidential to allow the plaintiff, if so advised, to take proceedings to obtain their recovery. This obligation upon Smith and Clayton Utz not to disclose the contents of these documents extends, so it was accepted, to an obligation not to divulge their existence to any person without the authority of Westgold and certainly not to divulge their existence to the defendant Woss or to any other party with an interest in the present proceedings adverse to that of the plaintiff. That the existence of the documents has already been disclosed to Woss, and that, through his solicitors, Woss has since attempted to obtain access to them for
(Page 10)
- inspection, is plainly not due to any action or omission by Mr Blackman or by Clayton Utz. That disclosure, on the evidence, was made by Smith before his possession of the documents was known to Clayton Utz. It was therefore, solely Smith who let the cat out of the bag. Once that occurred, it was inevitable that Woss would seek to obtain access to them. Although it has not been raised, this would seem to suggest that there is a significant possibility that the first defendant, St Barbara, will also have an interest in obtaining access to those documents.
15 Westgold primarily based its claim for relief on the duty which fell upon Mr Blackman, while at Clayton Utz, to keep the documents disclosed to him confidential. This led on to the submission that, in losing the documents, at least temporarily, Mr Blackman placed the plaintiff in a position of special vulnerability so that it was said to be unfair that he should now be able to act for an opposing interest having contributed to the risk of disclosure of these documents which now exists and the accompanying uncertainty for the plaintiff about whether its confidential information remains secure. Westgold also relied upon the jurisdiction of this Court to control its own officers in order to preserve the integrity and confidence in the legal process as a ground for restraining Mr Blackman from acting by pointing to the risk of disclosure which his actions had created. Not surprisingly, these submissions produced a response from the solicitors for St Barbara that, no confidential information had been disclosed to their client and that Mr Blackman was not in a position to make any disclosure being ignorant of the contents of the unread documents. Whether this is a sufficient basis for an analysis of the position depends upon an examination of the rights and obligations of the parties which must now be undertaken.
16 There are at least three bases upon which Westgold can rely for claiming relief to keep its information confidential. They are contract; the equitable obligation of confidence which exists irrespective of contractual obligations; and the control of the court over its own officers.
17 The documents in question were obtained by Mr Smith in his role as an employee and director of Westgold as part of the preparations for this present litigation. This clearly marks them as confidential and the fact that some of them are subject to unchallenged claims for legal professional privilege simply reinforces that conclusion. As a director and employee of the plaintiff, Smith had, and still has, obligations to preserve the confidences of Westgold by avoiding or preventing any unauthorised publication or disclosure of these documents. Such an obligation will usually be implied as a term of the contract of employment: Prebble v
(Page 11)
- Reeves [1910] VLR 88 at 108. Similarly, a contract between a client and a solicitor will usually include an implied term obliging the solicitor to keep his client's affairs secret and not to disclose them to anyone without just cause - Parry-Jones v Law Society [1969] 1 Ch 1. Where such contractual obligations exist it will generally be sufficient to determine the obligations of the parties with reference to the terms of their contract rather than by having resort to equitable principles – Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 at 191, although there is authority for recourse to equitable principles even where they overlap with contractual obligations – Mense v Milenkovic [1973] VR 784.
18 So the contractual obligations in the present case will be sufficient to impose an obligation of confidence on Smith for the benefit of Westgold and upon Blackman and his partners at Clayton Utz for the benefit of Smith. However, equity will go further and impose an obligation of confidence on Blackman, and his former partners at Clayton Utz, for the benefit of Westgold notwithstanding the absence of privity between them. Whether the contractual or the equitable doctrines are invoked to determine the existence of a confidence, one of the common tests to be applied is whether or not the information was disclosed for a limited purpose. If it was the confidence will crystallize around that limited purpose, and the recipient of the information will be bound by an obligation not to use or disclose the information for any purpose other than the limited one for which it was imparted – see Gurry "Breach of Confidence" - Essays in Equity edited Finn (1985) at 118. That unauthorised use or disclosure of confidential information, not involving any breach of contract, tort or some fiduciary duty will attract the general equitable jurisdiction of a court has now been established by Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 438 and Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 50. Within the content of this equitable duty of confidence lies the obligation that the recipient of the confidential information shall not take unfair advantage of it and may not make use of it to the prejudice of the person who supplied it without consent: Seager v Copydex (No 1) [1967] 2 All ER 415 at 417. So it is that there will be a breach of the duty not only by disclosure to an unauthorised third party but also if the recipient of the confidential information uses it for any purpose other than that for which it was supplied - Smith Kline & French Laboratories (Aust) Limited v Secretary, Department of Community Services & Health (1990) 22 FCR 73 at 74 (affirmed on appeal at (1991) 28 FCR 291). This doctrine provides a basis for protecting the confidences of the plaintiff in
(Page 12)
- the materials whether in the hands of Blackman or his former partners at Clayton Utz.
19 These principles can be, and often have been, applied to protect the confidences of a former client if there is any risk that the client's former solicitors may disclose them or inadvertently make use of them to the prejudice of the former client. Typically, such intervention by a court will occur in a situation where the former solicitor is acting or proposing to act for another client against the former client. In that case the enquiry becomes whether or not there is any real risk that information obtained by the solicitor from the first client in confidence may be disclosed or used to the former client's disadvantage. The application of the principle in this setting has often caused difficulties when confidential information has been received by one member in a firm, often before joining that firm, and another partner in that firm is acting for the adverse interest. How that situation is addressed and resolved was considered at length by Ipp J in Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 17 WAR 98 at 100 - 104 but it does not arise in the present litigation. Nevertheless, it is clear that these principles are for the protection and enforcement of the confidentiality of information of a party invoking the protection of the court. It will be necessary to consider further to what extent they apply where, as already explained, Mr Blackman has no personal knowledge of any confidential information of Westgold and there is no actual or impending risk of disclosure by him of such information to adverse interests.
20 This is an area where the law of confidentiality interacts with the obligations reposing on fiduciary agents. Where a solicitor receives confidential information it will be subject, as already mentioned, to contractual obligations to preserve its confidentiality for his client's principal. Where the confidential relationship is for the benefit of a person who is not the client, the solicitor will be bound by an obligation of confidence enforceable in the absence of special contractual or fiduciary obligations - Moorgate Tobacco (supra). However, where the solicitor is acting for a client, or the client's principal, he will have concurrent fiduciary obligations which bind him as well - Nocton v Lord Ashburton [1914] AC 932 and Maguire v Makaronis (1997) 188 CLR 449. In the present case these fiduciary obligations to protect and preserve the confidentiality of the documents delivered to Mr Blackman at Clayton Utz extended not just for the benefit of Mr Smith but for the plaintiff Westgold to whom Smith owed similar obligations. Consequently, the obligations of Mr Blackman and Clayton Utz extend beyond the preservation of the confidentiality of the documents and include the full
(Page 13)
- range of fiduciary obligations between a solicitor and his client's principal. They include the obligation to avoid a situation of a conflict of interest or a situation of a conflict of duty. These are fiduciary obligations which, in the present case, I consider are owed by Mr Blackman and by his former partners at Clayton Utz, to Westgold in view of the fact that it was the confidential information of Westgold which was disclosed to the solicitors by Westgold's former director and employee.
21 As explained by Steytler J in Newman v Phillips Fox (1999) 21 WAR 309 at 315 - 316, the court also possesses a jurisdiction over solicitors, as its own officers, to ensure that the administration of justice is not brought into disrepute by their conduct and to ensure preservation of the objectivity and integrity of the trial process. Steytler J cited the decision of Austin J in Oceanic Life Ltd v HIH Casualty and General Insurance Limited (1999) 10 ANZ Ins Cas 61-438 at 74,978 for the proposition that, in the realm of conflicts of interest and conflicts of duty, the solicitor's duty to the court may not be much different from his or fiduciary duties to former or present clients but that the duty of the court tends to be expressed in such a way as to emphasise the public interest in preserving confidence in the administration of justice and, therefore, in the appearance, as well as the reality, of independence of its officers. Westgold relies upon this doctrine in support of its application for an order that the court should restrain Mr Blackman from acting further in the proceedings and, in addition, cites Grimwade v Meagher [1995] 1 VR 446 and Black v Taylor [1993] 3 NZLR 403.
22 This has led Westgold to submit that, although Mr Blackman has not read the documents and therefore does not have any personal knowledge of their contents, this does not affect his duty to preserve the confidentiality of the documents, or to refrain from passing them to any other person without the consent of the plaintiff, or to return the documents to the plaintiff. The plaintiff submits that because Mr Blackman can no longer account for the whereabouts of the documents or deliver them up to Westgold he is in breach of his duties of confidentiality. This leads to a further submission that a reasonable man, in these circumstances, would see it as being inconsistent with the fair and proper administration of justice if Mr Blackman should now be at liberty to act against Westgold. This submission, in turn, relies upon the contention that, by misplacing the documents and so being unable to return them to Westgold, Mr Blackman has placed the plaintiff in a special position of embarrassment and vulnerability. It is contended that Westgold is now in a position of greater vulnerability than the first defendant, St Barbara, and that this precarious situation has been caused
(Page 14)
- by the solicitor who now seeks to continue to act for St Barbara. It is argued that if Mr Blackman is permitted to act for St Barbara this would compound the harm already suffered by Westgold and leave it in an even more invidious position. Finally, Westgold contends that the court should not permit one of its officers to act against a former client in circumstances where that solicitor, in breach of duty, has caused his former client to be placed in the position of special vulnerability and disadvantage with respect to opponents in the litigation. This argument assumes that, in some way or another, the lost documents may in the future be disclosed to St Barbara, or to other persons with interests adverse to Westgold and that, so long as this potentiality for disclosure exists, Blackman should not be permitted to act for the first defendant.
23 Westgold relies on the decision of the House of Lords in Bolkiah (Prince Jefri) v KPMG (a firm) [1999] 2 AC 222 for the proposition that if there is a potentiality for the confidential information to be disclosed to the prejudice of the former client the courts should intervene unless it can be shown that there is no such risk of disclosure. That decision was also applied in Newman v Phillips Fox (supra).
24 In my view, however, the facts in the present case are distinguishable from the situations which were examined in Newman v Phillips Fox (supra), Bolkiah (Prince Jefri) v KPMG (supra) and the other authorities relied upon by the plaintiff. Neither Mr Blackman nor the firm Tottle Christensen is presently in possession of the missing confidential documents. Nor are any partners in that firm, including Mr Blackman, personally cognisant of any of the confidential information, the disclosure of which may jeopardise Westgold's interests. On the evidence, the situation at present is that it is most unlikely that the confidential documents will come into the possession of Tottle Christensen or of Mr Blackman. If they were to be found at Clayton Utz I consider that I should assume that steps would be taken by that firm to see that they were returned to Westgold without any disclosure to Tottle Christensen or to Mr Blackman. Therefore, insofar as the plaintiff's arguments depend on principles designed to preserve the confidentiality of the plaintiff's documents, or to prevent the risk of disclosure of the contents of those documents by solicitors presently acting for an opposing party, I do not see how they can be made out. Furthermore, as there is no evidence to suggest that there has been disclosure of the confidential information to any person or persons who may, in the future, disclose that information in turn to St Barbara or to any other person with an interest adverse to the plaintiff, I do not consider that Westgold has made out a case that Mr Blackman has acted unfairly or in breach of a duty to keep the
(Page 15)
- documents confidential. That being the case, I do not consider that any basis has been shown for the court to exercise its supervisory jurisdiction over its officers to prevent an actual, threatened or potential disclosure of confidential information by any one or more of the solicitors presently acting for St Barbara.
25 Nevertheless, the matter does not end there. Because the documents delivered to Clayton Utz, when Mr Blackman was advising Mr Smith, undoubtedly contained information which was confidential to Westgold, and because Clayton Utz and Mr Blackman were at all times under an obligation to preserve the confidentiality of that information for the protection of the plaintiff, the issue becomes whether they remain under any related continuing obligation. It seems to have been acknowledged before me, indeed it could hardly be doubted, that Clayton Utz were and remain accountable at the suit of Westgold for the delivery up of the file containing the confidential information and, before any such delivery, are obliged to take steps to ensure that its contents remain confidential. If it should emerge that the file has left the possession of Clayton Utz then I consider that it is, at least, arguable that Clayton Utz would be under an obligation to Westgold to disclose when, to whom and in what circumstances the documents were passed to that other person.
26 In practical terms this means that Clayton Utz remain under a continuing obligation to preserve the confidentiality of that file and to conduct all reasonable searches to locate it and deliver it up to Westgold. So long as it remains missing there will be a risk, however small, that its contents may come into the hands of St Barbara or some other person with an interest adverse to Westgold. The only practical antidote to this risk is for all necessary and reasonable searches to be made in an attempt to locate the file and, pending its rediscovery, for suitable precautions to be maintained to minimise the risk that it may be disclosed, accidentally or otherwise, to some third party. These obligations, in my view, are owed by Clayton Utz and by Mr Blackman, by virtue of the fact that, through Mr Blackman, that firm received a folder of documents containing confidential information for the limited purpose of advising Mr Smith, and because Westgold, being entitled to these documents, has since demanded, and Smith has agreed, that all the documents should be returned to it. The only reason preventing the return of these documents to the plaintiff is that they have, unfortunately, gone missing while under the control of Mr Blackman and his partners at Clayton Utz. The fact that the documents have been misplaced accidentally does not diminish this obligation.
(Page 16)
27 There seems to me to be no room for doubt that, if Mr Blackman were still a partner at Clayton Utz, he would be under an obligation, along with his other partners, to take all steps to retrieve the missing documents and to see to their delivery to Westgold. And, in the meantime, he would be obliged to take precautions to prevent their disclosure to others. The fact that Mr Blackman is no longer a partner of Clayton Utz and is now a partner of Tottle Christensen does not appear to me to diminish his obligation in this regard, an obligation which he personally incurred by accepting custody of the documents. It may be assumed that, in the course of his retirement from Clayton Utz, his obligations arising from partnership in that firm were assigned by him to the continuing partners, and that the continuing partners may have discharged him from some of the mutual obligations which existed between them while he was a member of the firm. However, any such assignment or release of obligations, as between the former partners themselves, cannot possibly release Mr Blackman from an obligation which he personally incurred to Mr Smith and which, through the receipt of the documents, has rendered him accountable to Westgold, for the return of the confidential documents.
28 So it is, that I conclude that Mr Blackman remains under a personal obligation to see to the delivery of the confidential documents to Westgold. It may be that he is no longer able, personally, to conduct or direct a search of the offices or records of Clayton Utz in order to perform this obligation but I consider that he is obliged, at least, to take all reasonable steps to cause his former partners to conduct such a search and/or to account, for the present whereabouts of the documents. In Newman v Phillips Fox (supra) at 315 Steytler J cited the speech of Lord Millet in Bolkiah (supra) for the proposition that where the court's intervention is sought by a former client the exercise of its jurisdiction cannot be based on any conflict of interest because, once the retainer has been terminated, the solicitor has no obligation, thereafter, to advance the interests of the former client. There can be no doubt about the correctness of that observation in cases where the obligations of confidence, or to advance the interests of a client, extend to the solicitor only by virtue of the client's, or former client's, retainer. In the present case, however, the obligation to preserve the confidentiality of these documents for the benefit of Westgold arose and continued independently of any retainer of Mr Blackman or Clayton Utz by Mr Roderick Smith. Their possession and custody of these documents created an obligation enforceable by Westgold independently of the retainer in the same way that similar obligations of confidence, can fall upon any person who, innocently or
(Page 17)
- inadvertently, comes into the possession of confidential information of another - Fraser v Evans [1969] 1 QB 349 at 361; Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 50 and G v Day [1982] 1 NSWLR 24.
29 Consequently, while Mr Blackman is no longer acting for Mr Smith I do not consider that that is any reason to affect or diminish his continuing duty to deliver up or to account to Westgold for the missing file containing confidential documents. If the file were to be found, in circumstances where it could be demonstrated that there had been no disclosure of its contents to others outside Clayton Utz and, if it were then returned to Westgold without being seen by Mr Blackman, or if it were possible to demonstrate that the file had been destroyed or irretrievably lost without its contents being further disclosed, that should put an end to any continuing obligations to search for the file and to protect the confidentiality of its contents by the partners at Clayton Utz and by Mr Blackman. However, there is no evidence before me to that effect nor any real reason to suppose that a thorough search would not even now result in the discovery and delivery up to Westgold of the missing file.
30 In this situation, therefore, so long as Mr Blackman continues to be under personal obligations to Westgold as I have outlined, it is necessary to examine the co-existing obligations which he has accepted by acting for St Barbara in this action at his new firm. Those obligations, to St Barbara, will require Mr Blackman and his partners to take all proper steps to advance the interests of St Barbara in the present litigation including to seek, and where possible, to obtain all information and evidence which may be of assistance to St Barbara in this litigation. It is not hard to see that this puts Mr Blackman and Tottle Christensen on a collision course with Mr Blackman's continuing obligation to attempt to find the file of confidential documents and return them undisclosed to the plaintiff. As has been said by Professor P D Finn in "Fiduciary Obligations" (1977), at 252:
"To ensure a loyalty which is undivided the courts have prohibited a fiduciary from serving 'two masters' at the same time in the same matter or transaction unless he has first obtained the informed consent of both 'masters' to his so acting. As Donaldson J observed in the Agency case, North and South Trust Co v Berkeley [1971] 1 W.L.R. 470 at 484 - 5:
'Fully informed consent apart an agent cannot lawfully place himself in a position in which he owes a duty to
(Page 18)
- another which is inconsistent with his duty to his principal --- '
- And even if informed consents are obtained, they will not absolve the fiduciary from liability to one master if he cannot properly discharge his duties to him because of conflicting duties owed to the other."
- When this point was raised in argument at the hearing of the case, counsel for St Barbara submitted that this was a ground which had not been raised or relied upon by the plaintiff in its submissions or in argument. However, I do not consider that that proposition can successfully be maintained in view of the written submissions by Westgold that Mr Blackman was under an obligation to return the documents to the plaintiff. Even if that objection had been made out, I do not consider that it would be any reason to withhold a remedy against a fiduciary and officer of the court which would be necessary to prevent a continuation of a state of affairs where there was a conflict between two inconsistent duties by that solicitor fiduciary.
31 No attempt was made to argue that if Mr Blackman were prevented from acting for St Barbara in the present proceedings, another or other partners at Tottle Christensen would be free to continue to do so. While it may be true that the other partners at Tottle Christensen are not under any duty to Westgold to take steps to attempt to retrieve the missing file and to ensure its safe delivery undisclosed to the plaintiff, I do not see how Mr Blackman can discharge his continuing obligation to Westgold while at the same time being subject to the joint and several obligations of his partners at Tottle Christensen to advance the interests of St Barbara in this present litigation.
32 In a real sense the factors which, in my view, prevent Mr Blackman and Tottle Christensen from acting for St Barbara are of temporary duration. They may disappear if the missing file can be found in circumstances which demonstrate that there has been no disclosure of its contents of any kind which may cause prejudice to the plaintiff, or if it can be demonstrated that, what amounts to the same thing, the file has been lost or destroyed in circumstances where there is no real prospect that it will ever be found. Much will depend on just what exactly the position is after all due steps have been taken to attempt to locate or to account for the missing file. There is simply no evidence before me at present which deals with those issues.
(Page 19)
33 Accordingly, I consider that an order or injunction restraining Tottle Christensen and Mr Paul Blackman from acting further in these proceedings for St Barbara should issue. It may be unnecessary for a formal order to be made if the solicitors give an undertaking to cease acting immediately, as occurred in Clay v Karlson (supra). It is to be emphasised that this relief is being ordered against the solicitors alone and not against the first defendant and that the solicitors have indicated that they will comply even if not formally joined. If any further proceedings are likely to arise from this decision, whether by way of appeal or otherwise, it may be desirable for the firm Tottle Christensen to be made a party to these proceedings and, if necessary, I will entertain any application for their joinder if that is sought.
34 No actual or threatened breach of duty by St Barbara having been established, I consider that the application for an injunction against it should be dismissed. Similarly, as it has not been shown that Messrs Tottle Christensen or Mr Blackman are presently in possession of any documents belonging to Westgold which either has received directly or indirectly from Mr Smith, I do not consider that Westgold is entitled to any order against them requiring the delivery up of documents as sought in par 2 of this application. I will hear counsel as to the form of orders which should be made to give effect to this decision and on any question of costs.
4
13
0