Wyndham City Council v CSR Ltd

SUPREME COURT OF VICTORIA

COMMERCIAL LIST Not Restricted

F4810	No. 6799 of 1997
WYNDHAM CITY COUNCIL	Plaintiff
and
CSR LIMITED (ACN 000 001 276)	Defendant

-----

JUDGE:	Chernov, J.
WHERE HELD:	Melbourne
DATE OF HEARING:	16 October 1998
DATE OF JUDGMENT:	16 October 1998
CASE MAY BE CITED AS	Wyndham City Council v CSR Ltd
MEDIA NEUTRAL CITATION:	[1998] VSC 156

-----

INJUNCTION - Interlocutory injunction - Solicitor and client - Protection of confidential information - Inadvertent disclosure - Whether reasonable apprehension of the possibility of disclosure.

-----

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S.R. Morris, QC with	Blake Dawson Waldron
Mr M.L. Sifris and Ms M. Sloss
For the Defendant	Mr D.G. Collins	Corrs Chambers Westgarth

-----

CHERNOV, J:

This is an application by summons by the defendant, CSR Limited, effectively to restrain a law clerk of the former solicitors for the plaintiff, Rodney Stumbles (Stumbles), from continuing to assist the plaintiff's solicitors in the conduct of this proceeding which was due to be heard on 5 October 1998, but for reasons which are irrelevant for the present purposes, will be heard in November 1998.
The proceeding was issued in August 1997 by Wyndham City Council, to restrain the defendant from conducting a landfill operation on part of the land owned by it, which is within the municipality of the plaintiff. At the time the proceeding was issued, the solicitors for the plaintiff were Freehill Hollingdale and Page (Freehills). The solicitors for the defendant were and are Corrs Chambers Westgarth (Corrs).
The relevant partners or employees of Corrs were Michael Pryse, Alan Mitchell and Jacqueline Frazer (the three persons from Corrs). They had, in effect, the carriage of the proceeding for the defendant. The persons at Freehills who conducted the case for the plaintiff were Dennis James Davies, a principal in the firm, and Stumbles, to whom I have referred.
Counsel who drew and settled the Statement of Claim, was Mr Greg Garde, one of Her Majesty's counsel. It is convenient to mention at this point that Mr Garde no longer appears in the case and Mr Stuart Morris, one of Her Majesty's counsel, now appears for the plaintiff and has done so for some time. He appears with Mr Michael Sifris and Ms Melanie Sloss of counsel.
In this application, the defendant relies principally, so far as evidentiary material is concerned, on the affidavits of Ian McLeay Mutton (Mutton) sworn 13 October 1998. He is the corporate counsel of the defendant and has been involved at all relevant times in the conduct of the proceeding. The other affidavit relied upon by the defendant is the affidavit of Daniel John Marquet (Marquet), who is a partner at Corrs.
Mutton deposes, and there is no reason to doubt, that the proceeding is commercially sensitive for the defendant. He says it involves the development of a prescribed waste facility which faces, he says, significant political opposition and has yet to be approved by the Minister for Planning and Development.
He says, and I accept, that the instructions relating to the conduct of the case and the material relating to it are highly confidential, if not wholly, at least in substantial part.
It seems from the evidence, that the three persons from Corrs have in one way or another been associated with and privy at least to some - and I think the evidence makes out a substantial amount - of information that is confidential to CSR.
In August 1998, the three persons from Corrs left that firm and joined Freehills. Corrs continued to act for the defendant, and Freehills at that stage continued to act for the plaintiff. There was, not surprisingly, correspondence between Freehills and Corrs as to the propriety or otherwise of Freehills continuing to act.
Corrs, on behalf of its client, sought an undertaking from Freehills that it would not permit the three persons from Corrs to commence working with or become partners at Freehills and that no member of Freehills would communicate with any of them about this proceeding.
This undertaking was sought, of course, until the termination of the proceeding. The undertaking was not given but in early September 1998, Blake Dawson Waldron (Blakes) took over from Freehills and have since then been responsible for the conduct of the proceeding on behalf of the plaintiff.
It seems clear from all the evidence, that Stumbles was engaged by Blakes shortly after they commenced acting for the plaintiff, for the purpose of assisting it in the conduct of the litigation. It is clear that there has not been a communication of that fact directly from Blakes to Corrs.
However, when the matter was called on for hearing on 5 October 1998, Stumbles sat at the bar table clearly instructing on behalf of the plaintiff. The matter could not proceed, as I have said, on 5 October 1998 and was adjourned to be heard later in November of this year. After the proceeding was so adjourned, there was correspondence between the parties concerning the role of Stumbles, with the result that this application has now been made effectively to restrain him from working for Blakes in the conduct of the proceeding on behalf of the plaintiff.
The defendant says that there is a reasonable apprehension of the possibility of an inadvertent disclosure of confidential information if Stumbles continues to assist Blakes in the conduct of the case. It is common ground that Stumbles' office is separated from the offices of the three persons from Corrs by about five floors and it is also common ground - if it is not common ground, I accept for the purpose of this proceeding - that Stumbles works only at Blakes in relation to this case and that all the documentation to which he refers or uses is also kept at Blakes.
I should say that the documentary material in relation to this case is voluminous. It consists of 13 folders which make up the Court Book and no doubt there are many other documents considered and perused by Blakes for the purpose of conducting the case for the plaintiff. The same applies to Stumbles. Over the period during which he has been involved in the case, he would have had access to and become familiar with probably hundreds of documents.
This proceeding seems to me to be a very complex one. Mutton has deposed to the fact that he is concerned that there is a real and sensible possibility that the confidential information disclosed to the three people from Corrs may be made available to Stumbles and thus misused by him, albeit inadvertently, against the interests of the defendant. I accept, of course, that Mutton holds this view.
The affidavit of Marquet is, in relevant respects, similar to that of Mutton, in that it deposes essentially to the same matters. I need not repeat those matters here.
The plaintiff's material consists principally of an affidavit sworn by Christopher James Goddard (Goddard) of 15 October 1998. Goddard is a partner at Blakes and has, at all relevant times since the firm's engagement, been responsible for the conduct of the proceeding on behalf of the plaintiff. He says that Blakes was engaged to act on 3 September 1998 and had effectively one month to prepare for the conduct and presentation of this complex case on behalf of the plaintiff, and it would have been, as he puts it, extremely difficult for his firm to prepare the proceeding properly on behalf of the plaintiff without the assistance of Stumbles, particularly bearing in mind the unavailability of Mr Garde, who had been retained by the plaintiff in this matter for a number of years.
Goddard confirms that Stumbles commenced a secondment with his firm on 7 September 1998 and that his office is located close to that of Goddard. All the court and other documents associated with the proceeding are located in that part of the building. Goddard says, and I accept, that Stumbles is an important and integral part of the team of lawyers which assists him in conducting the proceeding on behalf of the plaintiff.
The evidence also shows that Goddard directed Stumbles to preserve the confidentiality of information acquired during the course of his secondment to Blakes. He believes that he has preserved the confidentiality of that information (and there is no suggestion that Stumbles is likely to disclose any such information to the defendant).
The evidence also makes it clear that the three persons from Corrs have been directed not to discuss any aspect of this proceeding or any other proceeding relating to the plaintiff with Stumbles, and he has received similar instructions. I accept the evidence of Goddard that Stumbles has, since the commencement of his secondment with Blakes, not had any discussions with any of the three persons from Corrs about any aspect of this proceeding.
The terms of Stumbles' employment with Blakes or the terms upon which he has been seconded to Blakes, are set out in the letter of 8 October 1998 from Blakes to Freehills. It is quite apparent from all the evidence that Stumbles will not be spending his time exclusively at Blakes, particularly since there is now a period of time before the proceeding is to commence. I have been informed from the Bar table that he is currently spending only about half his time at Blakes. As to the balance of his working time, he spends at Freehills working on other cases. As the date of the trial draws closer, it is expected that he will spend more and more time at Blakes in connection with this case, and it can be reasonably anticipated that as the date of the trial approaches, his time will be spent almost exclusively at Blakes.
I should note that a term of the secondment arrangement is that Freehills will not direct Stumbles in relation to any work which he is conducting or is to conduct for the plaintiff while he is seconded to Blakes and that all knowledge he derives whilst working for Blakes will be confidential to Blakes.
I have been told from the Bar table, and it is consistent with what Goddard has set out in his affidavit, that Stumbles is prepared to give an undertaking to the Court that he will not have any communication with any partner, employee or agent of Freehills, and that includes the three persons from Corrs, in relation to the subject matter of this proceeding or in relation to other proceedings between the plaintiff and the defendant.
I have also been told that Stumbles is prepared to undertake to the Court that he will not perform any work of any kind in relation to this proceeding at Freehills or take to Freehills any documents in relation to the proceeding which are kept at Blakes.
Finally, I should mention that Goddard says that if Stumbles is no longer able to assist him in the conduct of the proceeding, it will be necessary for him to brief a senior associate to provide him with the assistance that is required and not surprisingly, a significant amount of costs will be involved in doing that, and the benefit of the accumulated knowledge that Stumbles has in relation to this case, will be lost to the plaintiff.
For the purposes of the present application, I am prepared to accept that the critical question is whether there is a reasonable apprehension of a reasonable possibility of inadvertent disclosure, principally by the three persons from Corrs, of confidential information to the detriment of the defendant if the injunction sought is not granted. It is important to note that there is no conflict of interest that is operable in relation to Blakes.
Similarly, it is important to appreciate that Stumbles does not possess any relevant confidential information so far as the defendant is concerned. The real risk is whether or not those who have previously acted for the defendant are likely to impart, directly or indirectly, knowledge to Stumbles while he is at the premises of Freehills. I accept the submission of Mr David Collins of counsel for the defendant, that there is always a possibility of that happening, but that possibility must also exist if Stumbles happened to bump into Michael Pryse at a party.
I do not regard this case as being one which is to be determined in accordance with some of the pronouncements that have been made in the context of the so-called "Chinese Walls". There is no such principle that is sought to be applied here. It is not a matter of Freehills seeking to act for the plaintiff whilst the three persons from Corrs are within the overall premises of Freehills.
I have been referred by Mr Collins, in his careful and, if I may say so, persuasive argument to two principal cases. One is Equiticorp Holdings Ltd v Hawkins (1993) 2 NZLR 737, particularly at pp.739-740, and the other is Farrow Mortgage Services Pty Ltd (in liq) v Mendall Properties Pty Ltd and Ors [1995] 1 VR 1, particularly at p.5.
The test formulated by Henry, J in Equiticorp Holdings, supra, seems not to be materially different from the approach of Hayne, J in Farrow Mortgage, supra, although in my view, his Honour did not definitively state the test that is to be applied. His Honour said that it is sufficient for the purpose of warranting or justifying the grant of an injunction that there is a real and sensible possibility of misuse and included, of course, inadvertent misuse of confidential information. In my view, objectively, there is not a reasonable apprehension of the possibility or reasonable possibility of inadvertent disclosure of the information, if the undertakings to which I have referred which have been proffered by Stumbles, are given to the Court.
One cannot, of course, rule out the possibility of inadvertent disclosure, but the Court does not act on the basis of mere possibilities. Even in the context of this case, the possibilities must have a degree of reality and a degree of reasonableness and sense. If that were to be injected into the test, which I believe the Courts do, then I have come to the conclusion that there is no objective reasonable apprehension of disclosure in this case. For those reasons, I will refuse the injunction upon the undertakings to which I have referred.

[1998] VSC 156

16 October 1998