Wong and Shen and Ors
[2016] FCCA 1143
•8 March 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WONG & SHEN & ORS | [2016] FCCA 1143 |
| Catchwords: FAMILY LAW – Whether wife’s solicitor should be restrained from acting. |
| Legislation: Federal Circuit Court Rules 2001, Sch. 1 |
| Cases cited: Bosgard & Bosgard [2013] FamCA 308 |
| Applicant: | MR WONG |
| First Respondent: | MS SHEN |
| Second Respondent: | MS SAW |
| Third Respondent: | (OMITTED) PTY LTD |
| File Number: | MLC 8882 of 2015 |
| Judgment of: | Judge Roberts |
| Hearing date: | 8 March 2016 |
| Date of Last Submission: | 8 March 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 8 March 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr McIvor |
| Solicitors for the Applicant: | Pentana Stanton Lawyers |
| Counsel for the Respondents: | Mr Wilson |
| Solicitors for the Respondent: | GR Lawyers |
ORDERS
That Ziran Guo and GR Lawyers of 501 Little Collins Street, Melbourne be and are hereby restrained from continuing to act further for any of the Respondents in these proceedings.
That the Respondent Wife pay the Applicant Husband’s costs of today fixed in the sum of $3,242, payable by the Wife at the conclusion of the parties’ competing applications in relation to property matters.
IT IS NOTED that publication of this judgment under the pseudonym Wong & Shen & Ors is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 8882 of 2015
| MR WONG |
Applicant
And
| MS SHEN |
First Respondent
| MS SAW |
Second Respondent
| (OMITTED) PTY LTD |
Third Respondent
SETTLED REASONS FOR JUDGMENT
The Applicant is MR WONG (“the husband”).
The First Respondent is MS SHEN (“the wife”). Her mother, MS SAW is the Second Respondent and a company, (OMITTED) PTY LTD is the Third Respondent.
The solicitor currently acting for the wife is also acting in the proceedings for the other two respondents.
The application before me was transferred to me today by Judge Hartnett. The matter is already on track to go further with the proceedings but there is one narrow issue that needs to be determined today. That is the application by the husband that the wife’s solicitor by restrained from acting.
The facts when I read the affidavits are not wholeheartedly agreed but there are basic facts that are agreed:
·The husband and wife married.
·It was a relatively short marriage in the scheme of things.
·Mr Guo, the solicitor for the Respondents is, or certainly was, a Migration Agent and did some work in that capacity for the husband and the wife.
·Earlier in the piece there was, what I will describe a friendly relationship between Mr Guo and the husband and the wife.
·There is dispute between Mr Guo and the husband as to how friendly that relationship was but it appears clear to me that the husband and the wife were invited to Mr Guo’ daughter’s birthday party.
·They were also invited to some other function which, in fact, they did not attend.
So there was a relationship that was friendlier than just a Migration Agent and client relationship.
What is also now agreed as facts are that:
·Mr Guo, the wife’s solicitor, is the father of the unborn child that she is expecting; and
·Mr Guo and the wife are now living together.
The original objection to Mr Guo acting seems to have been on the basis that he was once their Migration Agent and, therefore, there might have been a breach of confidentiality. However, that has now extended and probably more of an argument is that he is effectively the de facto husband of the wife and is the father of the child which she is expecting.
I would like to thank counsel for referring me to a number of authorities. I mention them, but not in any particular order of importance. I was referred to:
·the 2013 Family Court decision of Fowler J in Bosgard & Bosgard;[1]
·the 2015 Full Court decision of Osferatu & Osferatu;[2] and
·the New South Wales Supreme Court decision in Kallinicos & Anor v Hunt & Ors,[3].
[1] Bosgard & Bosgard [2013] FamCA 308
[2] Osferatu & Osferatu [2015]FamCAFC 177
[3] Kallinicos & Anor v Hunt & Ors [2005] NSWSC 1181
They are the main ones that I was referred to by counsel that I will refer to.
I will deal firstly with what is probably the second aspect of the application and that is the close personal relationship between Mr Guo and the wife. The arguments put to me in relation to that are essentially those set out in the cases but in particular in Bosgard.[4] I refer to Fowler J’s paragraphs 34 onwards in relation to that where he says:
34. The authorities make it clear that the priority, in any conflict of fulfilment of duties owed by a solicitor, must be the fulfilment by the solicitor of their duty to the Court.
35. Given the history of the relationship between the husband and the solicitor and the proclamation of the love attendant upon it, is not hard to see how that priority might well be reversed and the solicitor place the love she has for her partner above the duty that she owes to the Court.
36. In relation to the solicitor’s duty to her client, it might likewise suffer from a lack of objectivity, independence and calm rationality in relation to the issues which arise in the proceedings.
37. The wife also asserts that there is a problem for her in dealing in this case with the woman who became her successful rival for her husband’s affections who is now acting for him.
38. The Court is never assisted by litigation riding on a wave of the emotions which might be engendered by such events; the reality of the Court’s task is not to punish vice and reward virtue, but to make decisions pursuant to its powers under the Family Law Act (Cth), in this case as to property.
39. The Court is assisted in the administration of justice where the litigants and legal practitioners focus on the issues of importance to that process. It is assisted where there is a focus on objectivity among legal practitioners and a capacity for them to be independent of their clients in the fulfilment of both their duty to the Court and their duty to clients. A lack of such focus and objectivity gives rise to the possibility of the integrity of the justice system being undermined.
[4] In Bosgard the solicitor was in a relationship with the husband
Each case turns on its facts and in that case the facts were different from these, in that there was a financial relationship as well. His Honour went on at paragraph 41 to say:
The solicitor has a clear direct stake in the proceedings as the sole director and shareholder of a creditor of the husband.
That is not the case in this matter. However, I have had cause, obviously to look at other decisions and I was referred in particular to paragraph 39 of Osferatu where their Honours said:
Before leaving this discussion we wish to refer to the statement in McMillan that even “a theoretical risk of the misuse of the confidential information” is sufficient to found relief. The phase “a theoretical risk” was echoed in Prince Jeffri in the passage quoted earlier. For our part, we find the word “theoretical” unhelpful. There is indeed a continuum of risk from obvious to remote. In Asia Pacific, Bergin J described the risk of disclosure or misuse as “probably real and not fanciful” (at [41]). In Billington Coleman J referred to “any real risk” (at [37]). That phrase was also used by Goldberg J in PhotoCure (at [78]). This is a more meaningful phrase. The consideration should be whether there is a real risk of misuse as opposed to one which is merely fanciful. To the extent that what we have said may be seen to represent a departure from McMillan (which we do not necessarily accept), it is to accord with more recent authority and provides a clearer test.
The McMillan decision[5] is one that is reasonably well known relating to lawyers’ conflict of interest and, indeed, it is probably the decision that established clearly that the test in Australia is a wider test and encompasses more than the more narrow test in Britain. It seems to me that the test is not one of where there must be seen to be an “actual risk”. It is not unlike a “theoretical risk”, but to be seen from the position of an informed and reasonable person sitting at the back of the court. It is how that person would see the test.
[5] McMillan and McMillan (2000) FLC 93-048
For the benefit of counsel, “the informed and reasonable person” is referred to in a rather nice decision which has absolutely nothing else to do with this case. That is a decision of the relatively new UK Supreme Court in Healthcare At Home Limited v The Common Services Agency (Scotland).[6] The first four paragraphs are interesting in describing the test about the reasonable man and the fair-minded and informed observer. Probably the rest of the case is absolutely irrelevant to this matter but as both counsel would be well aware, the reasonable man has been often mentioned as travelling on a Clapham omnibus. In the Healthcare At Home decision, Lord Reed, with whom Lord Mance, Lord Kerr, Lord Sumption and Lord Hughes all agreed, started his judgment in this way at paragraph 1:
The Clapham omnibus has many passengers. The most venerable is the reasonable man, who was born during the reign of Victoria but remains in vigorous health. Amongst the other passengers are the right-thinking member of society, familiar from the law of defamation, the officious bystander, the reasonable parent, the reasonable landlord, and the fair-minded and informed observer, all of whom have had season tickets for many years
[6] Healthcare At Home Limited v The Common Services Agency (Scotland) (2014) UKSC 49
I wish I could start judgments with paragraphs like that but the decision goes on to explain that it is a legal fiction and it would be fairly silly to try and call someone who happened to be a passenger from the Clapham omnibus to give evidence.
This decision that I need to make is based upon whether a fair-minded and informed observer without legal training would consider it to be appropriate for Mr Guo to continue acting for the wife. If the fair-minded and informed observer was aware that the duty owed to the court is higher than the duty owed to the client, then I think the fair-minded observer may sit back and say; “How can a person who is sharing the bed of the client bring an objective approach to the matter?” So, on that ground, it does seem to me that Mr Guo is, essentially, on thin ice.
When you put that together with the fact that Mr Guo concedes that he did act for the parties in relation to migration matters and while he does not concede a very close friendship, he did act in a friendly manner by inviting them to celebrations, one being his daughter’s birthday celebration. So one would look at that and think; “Well, that is another factor that needs to be taken into account.”
Whether there was any confidential information or not seems to me not to be the relevant question. Indeed, various professional bodies such as Law Societies and the like around Australia suggest to their members that a cautious approach should be adopted in relation to family law matters. The Law Institute of Victoria’s website used to state:
In the family law context, lawyers must be sensitive to the common law’s low threshold for a finding of conflict of interest. Courts do not ask whether there is an actual conflict established, but whether there is a perceived conflict. This is a much easier test to satisfy, so where family law is involved a firm will be more easily prevented from acting in a later matter.
And it also stated:
For the purpose of finding a conflict, confidential information does not need to be cold, hard facts; intangible information about a client is sometimes enough.
Some time ago in an article for Sound Education in Family Law, New South Wales lawyer, Duncan Holmes referred to the “intangible information” that a lawyer may know about a former client. He said this:[8]
I would speculate that even knowing the attributes or “personality” of a former client could be construed as a breach of confidential information, if one was then to attempt to act for his/her spouse. Think about it, for a moment. For example, what if you know nothing more than that the former client is an anxious or a nervous type of person, possibly unable to cope with stress. Would it make you more likely to want to cross examine him? Would you think it in your new client’s interests to take the matter to trial? And so, the breadth of the concept of confidential information really knows no significant boundary.
[8] November 2009 release of “Sound Education in Family Law” by Television Education Network. Emphasis by Duncan Holmes.
I also note that in that particular article, Mr Holmes went on to quote from an unreported decision of Gillard J of the Supreme Court of Victoria. The unreported decision is Yunghanns v Elfic: [9]
… the relationship between solicitor and client may be such that the solicitor learns a great deal about his client, his strengths, his weaknesses, his honesty or lack thereof, his reaction to crisis, pressure or tension, his attitude to litigation and settling cases and his tactics. These are factors which I would call the “getting to know you” factors. The overall opinion formed by a solicitor of his client as a result of his contact may in the circumstances amount to confidential information that should not be disclosed or used against the client.
[9] Yunghanns v Elfic (1998) 3 July 1998, SCV at p10 and referred to on the Law Institute of Victoria website under “Ethics”.
In this particular case it seems to be clear that Mr Guo was not acting for the husband as a solicitor, as such. However, he was acting in relation to migration matters and he was a solicitor. The husband was “a client” in the broader sense of the word; not a “solicitor and client” client, but he was still a client and there was a relationship.
It is my opinion that when that is added together with the potential for lack of objectivity on the part of Mr Guo in relation to the proceedings, the cumulative effect of the two is such that Mr Guo should not act for the wife in these proceedings and he should not act for any of the other respondents in these proceedings. It follows that he cannot then act for the company or the wife’s mother and that he should be restrained from acting at all in relation to the proceedings.
I do note that this case is similar to Bosgard as well in what is referred to in paragraph 40 where his Honour said the proceedings are at an early stage. Its next substantial step is a Conciliation Conference which has been ordered and I think a date allocated for the Conciliation Conference is in June. That is certainly time for the wife, her mother and the company to obtain different representation.
When I say “different” I mean different from Mr Guo but that does raise something that they should think about; that being whether they should have different representation from each other. I have not been addressed on this at all or really been given any information but it seems to me that there is a possibility that the wife’s mother’s interests are not necessarily identical with those of the wife. As I read things, they are effectively 70 per cent and 30 per cent owners of the business, so it may well be that they do not have identical interests However, I am not making any finding about that; it might be something that they need to think about and the company probably falls into the same category.
ORDERS DELIVERED
I am now asked to rule on the question of costs in relation to today’s proceedings.
The husband seeks costs against the wife in the sum of $3,242, being the total of in accordance with Schedule 1 of the Federal Circuit Court Rules 2001 for an interim or summary hearing as a discrete event, daily hearing fee and advocacy loading.
The arguments put to me are that the husband has essentially been wholly successful in his application to have Mr Guo stop acting for the wife. Mr Mc Ivor says that the wife has the capacity to pay in that she is running the business.
Mr Wilson says that it was not until today that the argument was about the relationship and that the wife has not really had an opportunity to think about the matter. I do not accept that because Mr Guo’s letter of 11 January refers to the romantic relationship and it does seem to me that at least on 11 January the wife and her lawyer, who I have now said should not be her lawyer, had an opportunity to think about whether Mr Guo should continue acting. Today is 8 March so that is nearly two months in which they have had time to think about the concept of whether Mr Guo should have continued acting or not. So in that respect, certainly the husband has been wholly successful. The wife has had, in my view, an adequate opportunity to consider whether it was appropriate for Mr Guo to continue acting and Mr Guo had the opportunity to consider whether he should continue acting.
In my opinion, he was unwise to continue and to resist the application to have him removed as lawyer. So, in that respect, certainly the husband has been wholly successful, but it is one of those applications in which somebody is going to be successful and somebody is going to be unsuccessful; there is no halfway mark between continuing to act or not continuing to act.
Without going chapter and verse into their finances, it does seem to me that this whole argument between the parties is about relatively significant sums of money and in my view, the sum of $3,242 is not a sum that should prevent the wife from paying the husband’s costs. It does seem to me, however, that those costs should not be immediately payable; they should be payable at the conclusion of the parties’ competing applications in relation to property matters.
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Judge Roberts
Date: 16 May 2016
[7] I do not whether the website still states that, but I suspect it probably does.
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