Wilmer and Golding (No. 2)
[2017] FamCAFC 213
•5 October 2017
FAMILY COURT OF AUSTRALIA
| WILMER & GOLDING (NO. 2) | [2017] FamCAFC 213 |
| FAMILY LAW – APPEAL – where the wife sought an injunction to restrain the husband’s solicitors from acting for him – where the wife’s solicitor had ceased acting for the wife – where the wife’s former solicitor was employed by the husband’s solicitors’ firm – where the wife had discharged her onus with respect to establishing that confidential information was held and that it was relevant to the proceedings – where the husband’s solicitors provided irrevocable undertakings in respect of that confidential information – whether those undertakings amounted to an effective information barrier – whether the primary judge erred in finding that there was an effective information barrier that ameliorated the risk of disclosure – whether the husband discharged his evidentiary onus to show that there was no real risk the information would come into the possession of the husband’s legal representatives – where that onus was not discharged – where the risk of disclosure was real and not theoretical – where there was no evidentiary basis for the primary judge’s finding – appeal allowed. FAMILY LAW – APPEAL – LEAVE TO APPEAL – where the wife filed an application for leave to appeal – where the parties agreed that leave was necessary – where the appeal involved matters of principle – where the failure to grant leave would cause significant injustice – application for leave to appeal allowed. FAMILY LAW – COSTS – where the wife sought fixed costs against the husband – costs fixed in the sum of $10,000. |
| Family Law Act 1975 (Cth) s 94AA Family Law Regulations 1984 (Cth) reg 15A |
| Asia Pacific Telecommunications Limited v Optus Networks Pty Ltd [2007] NSWSC 350 Billington & Billington (No 2) [2008] FamCA 409 Bureau Interprofessionnel Des Vins De Bourgogne v Red Earth Nominees Pty Ltd (t/as Taltarni Vineyards) [2002] FCA 588 Dalton & Dalton (2017) FLC 93-773 Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus [2007] NSWSC 23 Newman v Phillips Fox (1999) 21 WAR 309 Osferatu & Osferatu (2015) FLC 93-666 Prince Jefri Bolkiah v KPMG (A Firm) [1999] 2 AC 222 |
| APPELLANT: | Ms Wilmer |
| RESPONDENT: | Mr Golding |
| FILE NUMBER: | MLC | 11080 | of | 2015 |
| APPEAL NUMBER: | SOA | 57 | of | 2017 |
| DATE DELIVERED: | 5 October 2017 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Strickland, Ryan & Murphy JJ |
| HEARING DATE: | 5 October 2017 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 31 July 2017; 1 August 2017 |
| LOWER COURT MNC: | [2017] FCCA 1856 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Matta |
| SOLICITOR FOR THE APPELLANT: | Mitchell Family Law |
| COUNSEL FOR THE RESPONDENT: | Dr Smith |
| SOLICITOR FOR THE RESPONDENT: | Berry Family Law |
Orders
The application for leave to appeal be granted.
That the appeal be allowed.
Paragraph 1 of the orders made by Judge McNab on 1 August 2017 be set aside.
The respondent husband be restrained from retaining Ms S or any partner or employee of Berry Family Law in these proceedings.
The respondent husband pay the appellant wife’s costs fixed in the amount of $1,081, being the costs paid by the appellant wife to the respondent husband pursuant to an order made by Judge McNab on 10 August 2017.
The respondent husband pay the appellant wife’s costs of and incidental to the application for leave to appeal and the appeal fixed in the amount of $10,000.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Wilmer & Golding (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SOA 57 of 2017
File Number: MLC 11080 of 2015
| Ms Wilmer |
Appellant
And
| Mr Golding |
Respondent
EX TEMPORE
REASONS FOR JUDGMENT[1]
Murphy J
[1]As was stated would occur when this judgment was delivered orally, citations quotations and the like referred to during oral delivery of these reasons have been added to the settled reasons. Headings have also been added to the settled reasons for ease of reference.
Over a period of about five months from late 2016 until May 2017, the wife was represented in proceedings before the Federal Circuit Court of Australia by a solicitor I will call “Ms B”. Ms B practiced on her own account. In May 2017, Ms B closed her firm and joined a firm that I will call “B Firm”. B Firm represents, and has at all material times represented, the husband.
The wife sought an injunction, restraining Ms S in B Firm “from continuing to represent the [husband]”.[2] A further injunction sought to restrain the husband from “retaining [Ms S] or any partner or employee of [B Firm] in these proceedings”.[3] Upon the giving of written undertakings by the husband and a number of people within B Firm, including Ms B, Judge McNab dismissed the wife’s application.
[2][1(a)].
[3][1(b)].
From that order, the wife brings this expedited application for leave to appeal, and if leave is granted, this appeal, which the husband opposes.
The application, and appeal if leave is granted, turns on whether his Honour erred in finding that a so-called “information barrier”, consisting of the undertakings earlier referred to, provides a proper foundation for the primary judge dismissing the wife’s application.
The Asserted Conflict and the “Information Barrier”
The wife asserts that in April 2017, Ms B advised orally that she had been made an offer to join B firm. However, she says she did not know that had occurred until receiving an email in early May 2017. That email advised that Ms B was closing her firm on in May 2017. The email did not reveal that Ms B was joining B firm, but the wife deduced from it that this is what had occurred.
The wife contended that Ms B “has been intimately involved” in the parties’ proceedings and “is aware of personal and confidential information relating to [her]”. She sought to infer that Ms B “is aware of privileged information belonging to [the wife] which could be used by [B firm]”.[4]
[4] Letter dated June 2017 from the wife’s solicitors to B Firm quoted at [2(f)] of his Honour’s reasons.
In broad terms, the wife contended that the undertakings did not sufficiently safeguard her confidences nor protect against disclosure of privileged information. She said this resulted from “how she was told that [Ms B] would no longer be representing her and because she was given inadequate notice and no assurance of confidentiality at that time”.[5]
[5][7].
B firm were cognisant of Ms B having previously acted for the wife when Ms B joined the firm. When challenged in correspondence from the wife’s new solicitor as to an asserted “clear conflict of interest” created by Ms B’s employment at the firm, Mr J, a partner of B firm, replied pointing to “Rule 10 of the Legal Profession Uniform Law” and advising that he had “established the information barrier protocols recommended by the Law Institute of Victoria”.[6] The undertakings earlier referred to were enclosed in that reply.
[6]Letter dated July 2017 from B Firm to the wife’s solicitors.
Rule 10 just referred to provides relevantly:[7]
[7] As quoted by his Honour at [3].
10. CONFLICTS CONCERNING FORMER CLIENTS
…
10.2 A solicitor or law practice who or which is in possession of information which is confidential to a former client where that information might reasonably be concluded to be material to the matter of another client and detrimental to the interests of the former client if disclosed, must not act for the current client in that matter UNLESS:
10.2.1the former client has given informed written consent to the solicitor or law practice so acting; or
10.2.2 an effective information barrier has been established.
The firm contends in its letter that the Law Institute’s “Information Barrier Guidelines” were “adopted by the Council on 20 April 2007”. It is said that the guidelines are designed precisely for circumstances such as the present.
The undertakings offered by B Firm in its letter to the wife’s solicitors and subsequently to the court, will need to be referred to in more detail but, as summarised at [5], are:
a)an irrevocable undertaking of compliance officer, [Mr J], a partner of [B Firm]
b)an irrevocable undertaking by solicitor with carriage executed by [Ms S];
c) an irrevocable undertaking signed by screened person – [Ms B];
d)an irrevocable undertaking signed by a screened person – [Ms E] (as an assistant to [Ms B]); and
e)an irrevocable undertaking of and limitation of retainer executed by the client of [B Firm] – [the husband].
(As per original)
“Exhibit A” annexed to his Honour’s orders, defines “[s]creened person” as: “a person who possesses confidential information from one retainer which is relevant to another, current retainer”. The screened person may be a partner or employee of the law practice”. It defines “[e]arlier matter” as “the retainer in which the confidential information was obtained, access to which the client and those acting on his behalf in the current matter is not entitled”.
Leave to Appeal
His Honour’s orders emanate from an Application in a Case and a Response to it pending a trial. In those circumstances, the wife assumes that the order appealed is interlocutory[8] and leave to appeal is sought accordingly.
[8]Family Law Act 1975 (Cth) (“the Act”) s 94AA; Family Law Regulations 1984 (Cth) (“the Regulations”) reg 15A.
In Osferatu & Osferatu[9] it was held that an order of the type sought by the wife is a final order:[10]
It is not expressed to be subject to further order. It finally disposes of the right of the husband to engage [B Firm]. It is a final order and leave is not required.
[9] (2015) FLC 93-666.
[10] Osferatu, 80,417 [64].
In Dalton & Dalton,[11] leave was applied for and it was assumed without further commentary that it was necessary.
[11] (2017) FLC 93-773.
Argument was not addressed before us to the apparent conflict in those authorities. In those circumstances, as both counsel before us agreed, it is preferable not to express a concluded view about that apparent difference in views in each of those decisions of the Full Court.
The question is here effectively moot because leave is in any event applied for and, as will emerge, I am of the view that, as the issue raised in the appeal involves matters of principle relevant to the conduct of family law practitioners and that failure to grant leave has the potential to cause significant injustice, leave should be granted.
The Relevant Principles and their Application
The principles relevant to an application of this type are well settled. They were discussed comprehensively in Osferatu and, more recently, in Dalton.
His Honour referred to, and relied upon, what was said by the majority in the latter case.[12] It is not contended that his Honour erred in the identification of the applicable principles.
[12] See, [8] ff.
By reference to those principles as set out in Osferatu and the authorities there cited, in the proceedings before his Honour:
a)There was no doubt that the wife satisfied her onus of establishing that she had disclosed confidential information to Ms B in the course of the retainer with her;
b)It is clear that Ms B was in possession of that confidential information as a consequence; and
c)The wife has not waived any confidentiality or any privilege attaching to the information.
However, as was said by the Full Court in that case, the establishment of those matters “is not the end of the case”.[13] It is also necessary for a court to consider:[14]
… the risk that the relevant confidential information will be disclosed. The risk of disclosure “must be a real one, and not merely fanciful or theoretical. But it need not be substantial” …
[13]Osferatu, 80,413 [31].
[14]Ibid, 80,413 [32], referring to Lord Millett in Prince Jefri Bolkiah v KPMG (A Firm) [1999] 2 AC 222, 237.
As was said by Coleman J in Billington & Billington (No 2),[15] a court hearing an application of this type was bound to take into account factors “relevant to the exercise of the jurisdiction, and not to be referrable only to the interests of the party seeking the relief”.[16] Those factors, described by the Full Court in Osferatu at [29] as “serious and weighty considerations” include:[17]
… the need to give appropriate weight to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause … [and] … the cost and inconvenience of requiring the [husband] to retain new lawyers. Quite apart from the work required to be undertaken by solicitors familiar with the case to adequately represent the wife's interests before the Full Court, realistically, were new solicitors now to be instructed, a far greater level of reading and preparation would be required, and at greatly increased expense to the [husband].
[15][2008] FamCA 409.
[16] Billington, [43].
[17] Ibid.
The Full Court in Osferatu posed the obvious question: “how is this to be determined” and answered it by saying:[18]
… It is by the consideration of the risk and of any protective measures taken or proposed by the solicitor or his or her new firm. The evidentiary burden on this issue falls squarely on the lawyer or the firm to which he or she has moved.
(Emphasis added)
[18]Osferatu, 80,413 [33].
That in turn requires:[19]
A balancing of the nature of the information against a consideration of the person to whom the information was given, when the information was given, the relevance of that information to the current proceedings, the risk of disclosure and any proposed protective measures …
[19] Ibid, 80,414 [35].
By reference to the wife’s primary ground of appeal and the arguments in support of it, this Court’s decision turns on whether his Honour was correct in concluding that B Firm had discharged the “evidentiary burden” to which the Full Court referred in Osferatu; specifically whether B Firm had established that the “information barrier” constituted by the undertakings and the asserted “proposed protective measures” within them ameliorated sufficiently the “risk of disclosure”.
In that respect, it should be noted that counsel for the husband conceded that the wife had discharged her onus with respect to establishing that confidential information was held and that it was relevant to a matter in which B Firm were continuing to act. There is, then, no notice of contention to the effect that the wife had not satisfied her onus and nor could there be.
The Judgment
In arriving at the decision that here the risk was sufficiently ameliorated, his Honour found centrally that:
18.The concerns raised by [the wife in her affidavit] do not establish evidence of a “real risk of disclosure” and it was not explained … [by the wife] why the circumstances (which are not clear as the [wife] did not wish to waive privilege) of being told that [Ms B] would no longer be representing the [wife] constituted grounds [for] a finding that there was a real risk of disclosure.
That conclusion was based on findings that distinguished the facts in Dalton, which was relied upon by the wife in submissions before his Honour. In particular his Honour found that “there was no declaration made as part of the undertaking” in that case that the previous solicitor “had not in the past conveyed confidential information to other members of the relevant firm” and further that “there was no evidence [in that case] in relation to the maintenance of the undertaking by the firm”.[20]
[20][17] (emphasis added).
His Honour was, with respect, correct, in my view, in concluding that, in a descriptive sense, “[t]he circumstances of this case are quite different”[21] from those in Dalton and in finding that those distinctions had the potential to be important in the instant case.
[21][13].
His Honour was also correct, with respect, in finding that, as a matter of principle, the adoption by a solicitor or firm of the Law Institute of Victoria’s Information Barrier Guidelines was not necessarily of itself an answer to relief of the type sought where, otherwise, the circumstances point to a real risk of the disclosure of confidential information.
Here, his Honour found:
a)The undertakings were in a different form to, and more comprehensive than, that which was found to be insufficient in Dalton;
b)There is no evidence that any solicitor within B Firm other than Ms B had received instructions from, or given advice to, the wife;
c)Specifically, the wife did not depose to having disclosed confidential information to Ms E (who is Ms B’s assistant) “although [the wife] does say she spoke to her about her file”;[22]
d)Both Ms B and Ms E have given comprehensive undertakings by which each undertakes that they “have not spoken to any person in [B Firm] in relation to the substance of the [wife’s matter] and have not conveyed any document or confidential information to any person working for or associated with [B Firm]” and give similar undertakings as to not doing so in the future. The undertakings also included a promise to “report to the compliance officer” immediately “upon becoming aware of any breach or possible breach of this undertaking”;
e)An undertaking by a partner of B Firm promises to take steps to monitor compliance with the undertakings otherwise given;
f)The undertakings include an acknowledgement by the husband that he is aware that “the screened persons may have information … relevant to [his] case” and promises to “waive my retainer with [B Firm] so as not to require my solicitor(s) to seek confidential information of the screened persons” and to instruct the firm and its relevant solicitors to give undertakings not to disclose to or discuss with “the screened persons” “any confidential information relating to the [wife’s matter]”.
[22]Ibid.
Ultimately, his Honour found, at [20]:
The Court is satisfied that there is clear and convincing evidence that effective measures exist to protect against any real risk of disclosure. I am not satisfied that it is an appropriate matter to disqualify [B Firm] from continuing to act – subject to the undertakings which were proffered by the [husband’s] counsel.
(Emphasis added)
It is important to point out that no evidence was presented by Ms B, Ms S or anyone else within B Firm. The satisfaction by B Firm of its onus in establishing sufficient protective measures stood or fell on the undertakings provided.
Those undertakings, in their original form, wrongly contended that confidential information was not held. At [4] and [5], his Honour refers to those undertakings and at [15], appears to acknowledge that the undertakings were deficient in that confidential information had in fact been provided. It seems plain from the transcript that those undertakings were offered after his Honour had determined to dismiss the wife’s application.
The Arguments
The primary argument for the applicant wife is summed up in this passage from the written outline of argument filed on her behalf:
23.Having established that the Husband’s lawyers were in possession of confidential information that are relevant to these proceedings, the evidentiary burden then shifted to the Husband “to show that even so there is no real risk that the information will come into the possession of those now acting for the other party”. It is submitted that this burden was not discharged by the Husband. In the absence of any sworn evidence, it was impossible for the Husband to have discharged this onus.
(As per original; footnotes excluded)
The outline goes on to contend:
25.It was submitted, before the Primary Judge, that other than the defective undertakings provided by the Solicitors for the Husband, there was no evidence of what effective measures were put in place or, as Counsel for the Husband submitted, what exactly the “information barrier scheme” is, that are “supported by the undertakings”.
…
27.Whilst the undertakings that were eventually proffered by the Solicitors for the Husband ultimately satisfied the Primary Judge, his Honour erred in accepting the undertakings simpliciter as sufficient evidence that the Solicitors for the Husband had established an effective information barrier.
Particular emphasis was placed upon the following passage of the judgment of the Privy Council in Prince Jefri Bolkiah:[23]
… It is one thing, for example, to separate the insolvency, audit, taxation and forensic departments from one another and erect Chinese walls between them. Such departments often work from different offices and there may be relatively little movement of personnel between them. But it is quite another to attempt to place an information barrier between members all of whom are drawn from the same department and have been accustomed to work with each other. …
In my opinion an effective Chinese wall needs to be an established part of the organisational structure of the firm, not created ad hoc and dependent on the acceptance of evidence sworn for the purpose by members of staff engaged on the relevant work.
[23][239]; Referred to by counsel for the wife in the Appellant’s Summary of Argument filed 22 September 2017, paragraph 30; Newman v Phillips Fox (1999) 21 WAR 309, 77-80 was also relied upon in that respect by counsel for the wife.
Effectively embracing, with respect, what was said there, the Full Court in Dalton said:[24]
54.The essence of grounds 3 and 4 is that when considered in context the primary judge erred in finding that adherence to the undertaking would eradicate any future risk of misuse of the husband’s confidential information. We are inclined to agree. The undertaking proffered by Mr Lewers did no more than attempt to provide an information barrier which protected the husband’s information reposed in Mr Lewers. It was silent about the information received by the firm during the period the husband was a client. For the undertaking to be effective it needed to be comprehensive and to demonstrate that there were systems in place which established an effective information barrier.
55.We agree with senior counsel for the husband that ordinarily evidence would be provided by a practice manager, or that style of person, which explained the manner in which the practice maintained and stored confidential information received by a client during the retainer, how and who might access that information and how, in the daily operations of the practice, the affected party and the court could be confident that the integrity of the information system would be maintained.
[24]Referred to by counsel for the wife in the Appellant’s Summary of Argument filed 22 September 2017, paragraph 33.
Accordingly, while difficulties exist particularly in small firms, nevertheless the task is by no means impossible.
The essential point made by counsel for the wife is that an evidentiary basis is lacking for his Honour’s conclusions and that the undertakings, of themselves, do not, and could not, provide that evidence. Further, it is contended that even if the undertakings are, of themselves to be, in effect, taken as evidence, they are insufficient to have satisfied his Honour that the protective measures were in place.
That point is sought to be exemplified in the wife’s summary of argument by reference to an undertaking by a partner of B Firm, Mr J, in these terms:
37.It is submitted that the undertaking provided by [Mr J] falls well short of “clear and convincing evidence” that “sufficient safeguards” were established for the following reasons:
a.The information contained in the undertaking provide no information or evidence as to what information barrier has been established. The assertions made by [Mr J] are mere conclusions that are not supported by any evidence of:
i.What “appropriate steps” have been, or will be, taken to monitor compliance;
ii.How any breach or “possible breach” would be addressed;
iii.How does the information barrier ensure the protection of the Wife’s confidential information to any person employed or “associated” with [B Firm];
iv.On what basis [Mr J] could be “satisfied” that no employee working on the current matter has received confidential information from the screen persons. Specifically, what enquiries or investigations were made?
v.Where is the confidential information held and how was it disseminated? What procedures have been implemented to ensure that, other than being satisfied that no confidential information has been received from the screen persons, that other employees cannot access that confidential information so as to avoid a risk of inadvertent disclosure?
Counsel for the wife sought to contrast the instant undertakings with that which was given in Bureau Interprofessionnel Des Vins De Bourgogne v Red Earth Nominees Pty Ltd (t/as Taltarni Vineyards).[25] The latter undertaking was in these terms:[26]
…
“In working on this matter, we have taken the following steps and in relation to which we officially put your client on notice:
1.Ms Dufty has not and will not in any way act for, or participate in us acting for, our clients in this matter.
2.Our clients will expressly limit our retainer with them, so that we are not in any way obliged to disclose or make use of any confidential information that Ms Dufty may have obtained whilst acting for your client in this matter.
3.No other person, legally qualified or otherwise, who previously worked with Ms Dufty whilst acting for your client in this matter, is part of our firm. As a result, Ms Dufty is the only person within our firm who could possibly have obtained any confidential information from your client in relation to this matter.
4.Ms Dufty has not disclosed any confidential information which she may have obtained whilst acting for your client in this matter to anyone within our firm. We will be willing to provide affidavits deposing this to be the case. Those within our firm acting for our clients in this matter will provide complementary affidavits deposing that they have not obtained any information in relation to this matter from Ms Dufty.
5.Ms Dufty will provide an undertaking that she will not disclose any confidential information that she may have obtained whilst acting for your client in this matter to anyone, including anyone within our firm.
[25] [2002] FCA 588.
[26]Bureau Interprofessionnel, [12].
6. No documents are retained by Ms Dufty which relate to your client.
7.Those in our firm acting for our clients in this matter will provide complementary undertakings that they will not obtain any information in relation to this matter from Ms Dufty.
8.Ms Dufty will not share support staff with anyone in this firm acting for our clients in this matter for the duration of the time in which we are retained by our clients in this matter.
9.The file and all documents concerning this matter, for the duration of the time in which we act for our clients in this matter, and all work which will be done by those in our firm acting for our clients in this matter, will be located or done on a separate floor to the one occupied by Ms Dufty.
10.We will instruct that all incoming correspondence in this matter, whether it be in postal, facsimile or email form, will be marked strictly confidential and addressed only to Stephen Stern. Mr Stern will open all correspondence personally.
The mailroom that handles all postal and facsimile correspondence for our firm will be informed of these measures and will be instructed to strictly comply with them and that any incoming correspondence in this matter must not be given to any inappropriate person within our firm.
11.Both Ms Dufty and all those within our firm acting for our clients in this matter will ‘lock’ their computers whenever they are absent from their respective offices. This will prevent any possibility of any unauthorised person accessing information on their computers in their absence.
12.All documents drafted by our firm in this matter will be subject to restricted access and be password protected, so that only those within our firm acting for our clients in this matter can access them.
All documents printed by this firm in relation to our firm acting for our clients in this matter will be printed from one identified printer. Ms Dufty will use a separate printer. Those in our firm acting for our clients in this matter will not print any documents on the printer used by Ms Dufty.
All documents and copies of documents in relation to this matter will not be left near printers or photocopiers. Any unwanted documents or copies in relation to this matter will be destroyed.
13.Any hardcopy materials drafted or obtained by us whilst acting for our clients in this matter will be stored solely in, and returned promptly after use to, the office on the separate floor and secured so that access to them will not be permitted without Mr Stern’s knowledge.
14.All telephone communication in relation to us acting for our clients in this matter will be conducted so as to minimise the risk of any ‘eavesdropping’ by anyone else in our firm not acting for our clients in this matter. Doors will be shut whenever such communication occurs and the volume of any calls on ‘speaker phone’ will be lowered to minimise the risk of being inappropriately overheard.
15.The measures set out in items 1 to 14 inclusive above will be explained to our clients. We will ensure that our clients both understand the reason for, and the vital nature of, these measures and duly complies with them where possible.
We submit that the measures outlined in items 1 to 15 inclusive above conclusively eliminate the any real risk that any confidential information obtained by Ms Dufty from your client could be disclosed. We will consider any other suggestions in this vein which you or your client may make.”
(As per original)
Counsel drew attention in particular to paragraphs 6; 8; 10; 12 and 14 of that undertaking, submitting that they addressed matters central to the protection of the wife’s confidences in this matter but which were not at all addressed in the undertakings upon which his Honour’s decision was based in this case.
Notably, the more comprehensive undertaking given in that case was supplemented by sworn affidavit evidence from the solicitor in question (who was not the solicitor with the actual carriage of the matter for the former client) and from a partner of the firm to which she moved.[27]
[27]Ibid, [52].
Federal Court Justice Ryan noted in Bureau Interprofessionnel that:[28]
… courts have been understandably reluctant to accept undertakings by members of staff engaged on the relevant work as adequate protection where there is a real risk of disclosure …
[28]Ibid, [57].
His Honour then went on to quote the passage from Prince Jefri Bolkiah outlined at [37] of these reasons:[29]
“In my opinion an effective Chinese wall needs to be an established part of the organisational structure of the firm, not created ad hoc and dependent on the acceptance of evidence sworn for the purpose by members of staff engaged on the relevant work.”
(As per original)
[29]Ibid, [57].
Importantly, as it seems to me, his Honour also made reference to the decision in Newman v Phillips Fox where it was held that a Chinese wall was inadequate “notwithstanding the best intentions of the lawyers and the impeccable standing of both firms” involved.[30] Here, it should be emphasised that no part of the application before his Honour or this appeal suggests any impropriety on the part of Ms B, Ms S, B Firm or any employee of it. The issue is one of insufficiency, not of impropriety.
[30]Ibid, [80].
Counsel for the husband argues that a distinction here is that as a result of the wife’s file being taken by her upon cessation of the retainer, there are no documents in the possession of Ms B that may, as it were, fall into the wrong hands.
In my view, that submission does not address the fundamental concern. While the outline of a “Chinese wall” is given, no evidence before his Honour underpins it. Moreover, it fails to take account of the transfer of information electronically.
Further, I accept the submission made on behalf of the wife that, even if the relevant undertakings (noting that they are solemn written promises made by officers of the court) are to be taken as “evidence”, their terms are nevertheless insufficient to address the risk of disclosure which is “real and not theoretical”.
I agree that the undertakings and evidence in Bureau Interprofessionnel, should be seen as illustrative. I seek to stress, however, that in so finding I am not suggesting that the undertaking there should be seen as prescriptive or illustrative of undertakings that may be, or may not be, suitable or appropriate in other particular factual circumstances.
The balancing exercise required his Honour to consider the broader public interest in seeing that justice is done by those with the responsibility for upholding it and who owe their first duty to the court and the interests of justice. To that effect, the Full Court in Dalton cited what was said by Bergin J in Asia Pacific Telecommunications Limited v Optus Networks Pty Ltd[31] which, in my view, should be emphasised again here:
62.The husband contends that these deliberations evidence a mere “balance of convenience” approach of the type usually associated with interlocutory orders whereas his Honour was required to, in effect, identify special circumstances which would justify refusal to grant the injunction. Although we agree with these sentiments, we think the point is better encapsulated in Asia Pacific Telecommunications Limited v Optus Networks Pty Ltd per Bergin J at [42] – [43]:
42.…The parties accept that such jurisdiction is to be regarded as exceptional and exercised with caution and that 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: Kallinicos v Hunt at [76]. In some cases the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a basis for refusing relief: Kallinicos v Hunt at [92]. However in my view if the court is otherwise of the view that the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice, requires the lawyers to cease to act there would have to be evidence of a most compelling nature as to the cost, inconvenience and impracticality to avoid an order restraining the lawyers from acting further. There is no evidence in this case of such cost, inconvenience or impracticality.
43. As Bryson J said in D & J Constructions Pty Ltd v Head & Ors t/as Clayton Utz at 123:
Cautious conduct by the court is appropriate because the spectacle or the appearance that a lawyer can readily change sides is very subversive of the appearance that justice is being done. The appearance which matters is the appearance presented to a reasonable observer who knows and is prepared to understand the facts”.
[31] [2007] NSWSC 350.
For those reasons, I am of the view that error is demonstrated in respect of the primary challenge advanced by the wife before us.
The Second Ground
The second ground of appeal challenges the adequacy of his Honour’s reasons. Counsel for the wife accepts that the ground is, in effect, the corollary of the argument in respect of the first ground.
In short summary, while his Honour, with respect correctly, found that the protocols approved by the Law Institute of Victoria were not determinative of the case before him, in the absence of any evidence at all as to the steps to be undertaken by B Firm to protect the wife’s confidences, his Honour’s ultimate finding effectively accepted them as such and, to the extent that he did not, the reasons do not explain why not.
I consider there is also merit in this ground.
Conclusion and Orders
For the reasons just given I consider that leave to appeal should be granted; the appeal should be allowed and his Honour’s order set aside. I would so order.
It is accepted by both counsel that in the event the appeal is allowed remitter is not necessary and that this Court should grant appropriate injunctions. Counsel have assured the court that in that event, the terms of an appropriate injunction can be submitted. Subject to its terms, I consider it appropriate for this Court to make such an order.
Submissions were taken from each party as to costs without the result of the appeal being known. Each concede that costs should follow the event. With a view to fixing any such costs orders, we sought submissions in that respect and I would receive those submissions with a view to this Court so ordering.
Subsequent to the delivery of these oral reasons, counsel indicated to this Court that they did not have the terms of an injunctive order to hand up, and that the court should make whatever order it considered appropriate. In that regard, I proposed the order should be in terms of paragraph 5 sought in the Amended Notice of Appeal.
We also received through the Appeals Registrar, notification that the wife would seek a costs order fixed in the sum of slightly short of $16,000.
In my view, that sum exceeds that which I would be prepared to fix costs at. In that respect, the terms of r 19.18(1)(a) of the Family Law Rules 2004 (Cth) (“the Rules”) are analogous to, for example, s 98(4) of the Civil Procedure Act 2005 (NSW). That section was the subject of the decision in Idoport Pty Ltd v National Australia Bank Limited & Ors, Idoport Pty Ltd v Donald Robert Argus.[32]
[32][2007] NSWSC 23.
There, Einstein J referred to the principles applicable to a court fixing costs. If the court is to fix a sum it “can only be fixed broadly having regard to the information before the Court”.[33] The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place.[34]
[33]Idoport, [9(v)] citing Beach Petroleum NL v Johnson (1995) 57 FCR 119, 124.
[34]Ibid, [9(iv)] citing Harrison v Schipp (2002) 54 NSWLR 738, [22].
Obviously enough, the court must act judicially in fixing or specifying a sum of costs, but:[35]
… it is not an arbitrary exercise of power for the Court to weigh up competing factors and make a determination, even if, as is often the case, the task cannot be undertaken in a mathematical or precise manner. As the Court of Appeal found in Norris v Blake (by his Tutor Porter) [No (1997) 41 NSWLR 49 mathematical weightings of potential outcomes in loss of chance cases might be unsustainable and reliance rather should be placed on more intuitive methods to determine loss: (1997) 41 NSWLR 49 at 71–73. Similarly, the courts are frequently required to estimate damages that are not capable of precise quantification and require a degree of approximation and even guesswork. [Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 and 138 and 153; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 at [37]–[38]]
The Court is no stranger to intuitive determinations, or determinations made without absolute precision, arrived at by acting judicially: cf Murray v Shillingsworth [2006] NSWCA 367 per Santow JA at [10]. It is misconceived to suggest that such determinations or approaches are arbitrary.
[35]Ibid, [11]–[12].
I have weighed the factors I consider to be relevant. In my view, the costs of the wife should be fixed in the sum of $10,000. This court raised with counsel for the wife that sum and no submissions were received contrary to the fixing of costs in that amount. I would so order.
Ryan J
I agree with the reasons given by Justice Murphy and the proposed orders.
Strickland J
I too agree with the reasons given by Justice Murphy and the proposed orders.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ryan and Murphy JJ) delivered on 5 October 2017.
Associate:
Date: 25 October 2017
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