Zani v Lawfirst Pty Ltd trading as Bennett + Co

[2014] WASC 75

ZANI -v- LAWFIRST PTY LTD trading as BENNETT + CO [2014] WASC 75

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2014] WASC 75
Case No:	CIV:1087/2014	Heard:	24 FEBRUARY 2014
Coram:	CHANEY J	Delivered:	12/03/14
No of pages:	16	Judgment Part:	1 of 1
Result:	Application for injunction refused
Category:	B
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Parties:	TODD ZANI EZETAX PTY LTD TZ MOTORSPORT PTY LTD LAWFIRST PTY LTD trading as BENNETT + CO
Catchwords:	Solicitors Confidential information Plaintiff's former solicitor joining firm representing other party in current litigation Information barrier established Whether solicitors should be restrained from acting for other party
Legislation:	Nil
Case References:	Bolkiah (Prince Jefri) v KPMG (a firm) [1999] 2 AC 222 Bureau Interprofessionnel Des Vins De Bourgogne v Red Earth Nominees Pty Ltd (t/a Taltarni Vineyards) [2002] FCA 588 Durban Roodepoort Deep Ltd v Mark David Reilly & Glenn Robert Featherby (as administrators of the Deed of Company Arrangement of Laverton Gold NL (subject to Deed of Company Arrangement)) [2004] WASC 269 Gugiatti v City of Stirling [2002] WASC 33; (2002) 25 WAR 349 Ismail-Zai v Western Australia [2007] WASCA 150; (2007) 34 WAR 379 Newman v Phillips Fox (a firm) [1999] WASC 171; (1999) 21 WAR 309 PhotoCure ASA v Queen's University at Kingston (2002) 56 IPR 86 Tottle Christensen v Westgold Resources NL [2003] WASCA 224 Yunghanns v Elfic Ltd (unreported; Supreme Court of Victoria; 3 July 1998) Zalfen v Gates [2006] WASC 296

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : ZANI -v- LAWFIRST PTY LTD trading as BENNETT + CO [2014] WASC 75 CORAM : CHANEY J HEARD : 24 FEBRUARY 2014 DELIVERED : 12 MARCH 2014 FILE NO/S : CIV 1087 of 2014 BETWEEN : TODD ZANI

First Plaintiff

EZETAX PTY LTD
Second Plaintiff

TZ MOTORSPORT PTY LTD
Third Plaintiff

AND

LAWFIRST PTY LTD trading as BENNETT + CO
Defendant

Catchwords:

Solicitors - Confidential information - Plaintiff's former solicitor joining firm representing other party in current litigation - Information barrier established - Whether solicitors should be restrained from acting for other party

Legislation:

Nil

Result:

Application for injunction refused

Category: B

Representation:

Counsel:

First Plaintiff : Mr T Coyle
Second Plaintiff : Mr T Coyle
Third Plaintiff : Mr T Coyle
Defendant : Mr S Penglis

Solicitors:

First Plaintiff : Lavan Legal
Second Plaintiff : Lavan Legal
Third Plaintiff : Lavan Legal
Defendant : Bennett & Co

Cases referred to in judgment:

Bolkiah (Prince Jefri) v KPMG (a firm) [1999] 2 AC 222
Bureau Interprofessionnel Des Vins De Bourgogne v Red Earth Nominees Pty Ltd (t/a Taltarni Vineyards) [2002] FCA 588
Durban Roodepoort Deep Ltd v Mark David Reilly & Glenn Robert Featherby (as administrators of the Deed of Company Arrangement of Laverton Gold NL (subject to Deed of Company Arrangement)) [2004] WASC 269
Gugiatti v City of Stirling [2002] WASC 33; (2002) 25 WAR 349
Ismail-Zai v Western Australia [2007] WASCA 150; (2007) 34 WAR 379
Newman v Phillips Fox (a firm) [1999] WASC 171; (1999) 21 WAR 309
PhotoCure ASA v Queen's University at Kingston (2002) 56 IPR 86
Tottle Christensen v Westgold Resources NL [2003] WASCA 224
Yunghanns v Elfic Ltd (Unreported, VSC, 3 July 1998)
Zalfen v Gates [2006] WASC 296




1 CHANEY J: The defendant, Lawfirst Pty Ltd, is an incorporated legal practice which trades under the name Bennett and Co. It acts for Ezeatm Pty Ltd (Ezeatm), the plaintiff in two actions in this Court, being actions CIV 2246 of 2013 (the first action) and CIV 2959 of 2013 (the second action). The plaintiffs in the present action, Mr Todd Zani, Ezetax Pty Ltd (Ezetax) and TZ Motorsport Pty Ltd (TZ Motorsport), are the defendants in the first action. Mr Zani is the sole defendant in the second action.

2 In this action, Mr Zani seeks an injunction against Lawfirst Pty Ltd restraining it from continuing to act as solicitors for the plaintiffs in both the first action and the second action. In both those actions, Mr Zani is represented by Lavan Legal. Up until late 2013, the partner of Lavan Legal handling Mr Zani's defence to the first action was Mr Mark MacLennan. In late December 2013, Mr MacLennan left Lavan Legal, and on 6 January 2014, joined Bennett and Co as a 'principal'. The basis upon which Mr Zani seeks an injunction in these proceedings is that he alleges that Mr MacLennan is possessed of confidential information in relation to the two actions, that there is a risk that that information might be disclosed to the solicitors or staff in Bennett and Co acting for Ezeatm, and that the Court should exercise its jurisdiction to restrain Bennett and Co from acting for the plaintiffs so as to preserve the confidential nature of the information.

3 Bennett and Co contend that Mr Zani has not established that Mr MacLennan is in possession of any confidential information, at least in relation to the second action, and in any event, adequate steps have been taken by Bennett and Co to ensure that there is no risk of disclosure of any confidential information which Mr MacLennan might possess.

The background

4 The claims in the first action allege various breaches of a contract of employment between Mr Zani and Ezeatm, and the involvement of Ezetax and TZ Motorsport in those breaches. Ezeatm also alleges, in the first action, that Mr Zani and the corporate entities received the benefit of various payments, during the time that Mr Zani was employed by Ezeatm, to which they were not entitled and which should be restored to Ezeatm. The claims all relate to Mr Zani's alleged conduct, and the involvement of his related corporate entities, during the time that Mr Zani was employed by, and a director of, Ezeatm, a period which finished in about 3 June 2013.

5 In the affidavit filed in support of his application, Mr Zani deposes to having met with Mr MacLennan on a number of occasions (usually in company with one or more other solicitors from Lavan Legal) in September, October and November 2013. Lavan Legal's time records show that Mr MacLennan worked on Mr Zani's matters for a total of 42.7 hours between 19 August 2013 and 12 November 2013. Those records include 2.8 hours on 19 September 2013 when Mr MacLennan met with Mr Zani, and a meeting on 31 October 2013 lasting 2.4 hours between Mr MacLennan and Mr Zani. Mr Zani deposes that other solicitors from Lavan Legal were present at those two meetings. In addition, Mr Zani deposes to having had a meeting lasting approximately 4 hours on 27 October 2013, although no record of that meeting appears in Lavan Legal's time records.

6 Lavan Legal's time records also show that on 5 November 2013, Mr MacLennan met with Mr Zani. The details on the time record read 'client advice re litigation'. The time records then show that Mr MacLennan drafted an order 24A letter and a letter of advice to the client. Pleadings filed in the first action show Mr MacLennan as the solicitor responsible for the preparation of the pleading.

7 It is clear from Mr Zani's affidavit, and from the Lavan Legal time records, that Mr MacLennan was closely involved in the conduct of Mr Zani's defence of the first action.

8 The second action was commenced on 31 December 2013, that is, after Mr MacLennan had left Lavan Legal. Those proceedings alleged various breaches by Mr Zani of restraint of trade covenants contained in his employment contract and in the contract of sale under which Ezeatm purchased, from an entity owned and controlled by Mr Zani and his brother, the ATM deployment business now are operated by Ezeatm. The breaches which are alleged in those proceedings arise from conduct allegedly engaged in by Mr Zani after the termination of his employment and directorship on 3 June 2013.

9 On 6 January 2014, Mr MacLennan joined Bennett and Co as a principal. Mr Colin Chenu, one of four directors of Lawfirst Pty Ltd, explained that Bennett and Co uses the titles 'principal', 'senior associate' and 'associate' to describe different levels of seniority of lawyers in the practice. Bennett and Co has seven 'principals', three of them, including Mr MacLennan, are neither a director nor shareholder of Lawfirst Pty Ltd, and have no entitlement to be either a director or shareholder as a result of their title of 'principal'. Mr MacLennan is thus properly classified as an employee of Lawfirst Pty Ltd trading as Bennett and Co.

10 Bennett and Co operate from premises at Level 10 of a building on the Esplanade, Perth. They also occupy a portion of the ground floor of that building. Mr Chenu, who is the partner responsible for the conduct of the first and second actions on behalf of Ezeatm, occupies an office on the southwest corner of Level 10. Mr MacLennan occupies an office on the northeast corner of the same floor.

Bennett and Co's information barrier policy

11 In February 2012, Bennett and Co commenced implementation of an information barrier policy, which is based upon the Law Society of New South Wales and the Law Society of Victoria guidelines on information barriers. Mr Chenu deposed that the information barrier policy was explained in detail to all of Bennett and Co's solicitors, research clerks, secretaries and support staff at compulsory seminars held on 8 February 2012, 15 March 2012 and 31 May 2012. The policy was finalised and formally adopted as a policy of the firm on 7 June 2012. Bennett and Co required all members of staff to read the policy and to sign a form acknowledging the same. That requirement is part of induction of new staff members who join the firm. A register of the acknowledgments signed by staff is kept by an employee who is responsible for maintaining information barrier records, ensuring new staff have read and understood the policy, and for organising continuing education in relation to the information barrier policy. Mr Chenu said that, as at the date of swearing of his affidavit of 31 January 2014, all Bennett and Co staff had signed an acknowledgment of having read the policy.

12 Bennett and Co has a program of ongoing education in relation to the information barrier policy and has conducted seminars for various members of staff to explain the purpose and operation of the policy from time to time during 2012 and 2013, and most recently on 29 January 2014.

13 Mr MacLennan attended the most recent seminar.

14 There are five current matters, or groups of matters, carried on by Bennett and Co which are presently subject to an information barrier. Since the commencement of Bennett and Co, the firm has employed four solicitors other than Mr MacLennan who have been required to comply with the information barrier in relation to other litigation matters.

15 The information barrier policy, the Law Society of New South Wales and the Law Institute of Victoria guidelines on information barriers, the current information barrier matters, and the forms and templates used under the information barrier policy are all maintained on the firm's intranet.

16 Bennett and Co also maintains an information barrier register showing active and inactive matters which are subject to an information barrier protocol, completed forms and templates for all information barrier matters, and the identity of each of the relevant officers for each matter affected by an information barrier.

17 Each matter, or group of matters, subject to an information barrier also has its own file, kept by the compliance officer for that matter or matters, in which is contained a copy of:

(i) the acknowledgment of the client that Bennett and Co's duty of disclosure does not extend to any confidential information which may be held within the firm as a result of the screened persons employment, and their consent to Bennett and Co to act on that basis;

(ii) copies of all correspondence with any third party relevant to the information barrier;

(iii) the executed information barrier forms; and

(iv) the log of actions in relation to the information barrier.

18 The information barrier policy itself consists of seven pages of text, including definitions, and a number of template forms. A screened person is defined as any principal, employee or consultant of Bennett and Co who possesses confidential information in respect of an earlier client by virtue of having been involved in an earlier matter. The policy also uses the term involved person, which is any principal, employee or consultant who is acting for a current client and who is involved in a current matter and who is not entitled access to the confidential information held by the screened person.

19 The policy is said to apply in various circumstances including those with which we are concerned in this matter. It sets out a number of steps which are to be taken which include an initial conflict inquiry, notification of any potential conflict, determination as to whether Bennett and Co will continue to act following identification of a conflict issue, and then implementation and management of an information barrier.

20 Where an information barrier is to be established, a number of steps are to be undertaken. The first is to identify the screened persons, a task to be undertaken by a compliance manager. A screened person must then undertake in writing not to have any involvement or communication of any kind with the current client, or the involved persons in relation to the confidential information or the current matter. Screened persons must also undertake in writing not to disclose any screened information to any person other than on the instructions and with the written consent of the earlier client. Any breach or possible breach of the undertakings must be reported to the compliance officer.

21 The second step is to identify involved persons and to notify those persons that they are involved persons and to explain the obligations which are set out in the policy. Those obligations include the provision of an undertaking not to have any communication with the screened persons in relation to the confidential information, not to solicit or receive any confidential information about the earlier matter or earlier client, not to possess any confidential information about the earlier matter, and immediately upon learning of any breach to report the breach or possible breach to the compliance officer for appropriate action.

22 Once the screened persons and involved persons have been identified, the compliance manager must appoint a principal or a senior associate as the compliance officer for the particular information barrier. The compliance officer must keep an up-to-date record of all the relevant persons involved in the barrier and undertake appropriate action having regard to the professional conduct rules in relation to any breach or potential breach of the policy.

23 The compliance officer must take steps to ensure that an adequate information barrier is maintained including nominating a particular printer to which a current matter resources are printed, to ensure that all involved persons and screened persons are informed so that steps can be taken to avoid inadvertent breaches of the information barrier, to restrict the access of screened persons to the electronic data file for the current matter, and to ensure that all current matter resources are stored so that they may be accessed by involved persons and are unlikely to be inadvertently accessed by screened persons.

24 The compliance officer must ensure that involved persons cannot access any confidential information relating to an earlier matter and that screened persons cannot access any information relating to the current matter.

25 The compliance officer must provide an undertaking to do all things required by the policy, and obtain appropriate undertakings in the forms annexed to the policy by screened persons and involved persons. He or she must also obtain a written acknowledgment from the current client that Bennett and Co's duty of disclosure to the current client does not extend to any screened resource which may be held by Bennett and Co as a result of the earlier matter, and that the client consents to Bennett and Co acting on that basis. That must be done prior to any work being commenced on the current matter.

26 The policy also provides that Bennett and Co will provide ongoing education to all principals, employees and consultants about the firm's procedures for protecting confidential information.

Applicable principles

27 Ordinarily, litigants are entitled to solicitors of their choice, and the court will interfere with that right only where it is clearly necessary to do so.1

28 In Newman v Phillips Fox,2 Steytler J dealt with an application to restrain solicitors from acting against a former client when in possession of confidential information. His Honour adopted the test expounded by the House of Lords in Bolkiah (Prince Jefri) v KPMG3 where Lord Millet said the following (with the concurrence of the other members of the court):

It is in any case difficult to discern any justification in principle for a rule which exposes a former client without his consent to any avoidable risk, however slight, that information which he has imparted in confidence in the course of a fiduciary relationship may come into the possession of a third party and be used to his disadvantage. Where in addition the information in question is not only confidential but also privileged, the case for a strict approach is unanswerable. Anything less fails to give effect to the policy on which legal professional privilege is based. It is of overriding importance for the proper administration of justice that a client should be able to have complete confidence that what he tells his lawyer will remain secret. This is a matter of perception as well as substance. It is of the highest importance to the administration of justice that a solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put that information at risk of coming into the hands of someone with an adverse interest.

Many different tests have been proposed in the authorities. These include the avoidance of ‘an appreciable risk’ or ‘an acceptable risk’. I regard such expressions as unhelpful: the former because it is ambiguous, the latter because it is uninformative. I prefer simply to say that the court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one, and not merely fanciful or theoretical. But it need not be substantial. This is in effect the test formulated by Lightman J in Re a Firm of Solicitors[1997] Ch 1 at 9 (possibly derived from the judgment of Drummond J in Carindale Country Club Estate Pty Ltd and adopted by Pumfrey J in the present case).

...

Once the former client has established that the defendant firm is in possession of information which was imparted in confidence and that the firm is proposing to act for another party with an interest adverse to his in a matter to which the information is or may be relevant, the evidential burden shifts to the defendant firm to show that even so there is no risk that the information will come into the possession of those now acting for the other party.

...

In MacDonald Estate v Martin (at 269) Sopinka J said that the court should restrain the firm from acting for the second client ‘unless satisfied on the basis of clear and convincing evidence that all reasonable measures have been taken to ensure that no disclosure would occur’. With the substitution of the word ‘effective’ for the words ‘all reasonable’ I would respectfully adopt that formulation.

29 That approach is now well-established in this State.4 As Lord Hope observed in Bolkiah (at 227), the duty to protect confidential information goes 'well beyond that of refraining from deliberate disclosure'.

30 Steytler J observed in Newman at [29] that there is now a substantial body of authority which suggests that the knowledge of those joining the new firm should not automatically be imputed or attributed to other lawyers at that firm. His Honour accepted as the preferable approach that espoused by Lord Millet in Bolkiah (at 235), namely that the question whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case.

31 Where a person seeks to restrain solicitors from acting because they are in possession of confidential information relating to that person, the onus is on that person to establish that the solicitor is in possession of confidential information.5

32 In relation to the discharge of that burden, Master Newnes (as he then was) said in Zalfen v Gates:6

In In re a firmof Solicitors (supra), Lightman J said (at 10), that generally it is not sufficient for the client to make a general allegation that the solicitor is in possession of relevant confidential information, if this is in issue; some particularity as to the confidential information is required. But the degree of particularity required must depend upon the facts of the particular case, and in many cases identification of the nature of the matter on which the solicitor was instructed, the length of the period of original retainer and the date of the proposed fresh retainer and the nature of the subject matter, for practical purposes will be sufficient to establish the possession by the solicitor of relevant information.

The degree of particularity with which the confidential information is required to be described must take into account that sometimes a lesser degree of precision may be necessary to avoid annihilating the confidence sought to be protected: Yunghanns v Elfic Ltd (supra) at 10; Sent v John Fairfax Publication Pty Ltd and Hills [2002] VSC 429 at [69].

Is Mr MacLennan in possession of confidential information?

33 I made reference above to Mr Zani's affidavit as to his various meetings with Mr MacLennan. Mr Zani does not particularise information which he gave to Mr MacLennan which might be confidential. Clearly, however, Mr Zani provided instructions to Mr MacLennan in relation to the first action, and apparently discussed potential settlement offers with him, and received advice. All of those communications are clearly privileged and confidential. The defendant in this action accepts that the evidence filed on behalf of the plaintiff is sufficient for the Court to infer that Mr MacLennan may possess confidential information of the plaintiffs relevant to the first action. That concession is correctly made.

34 The defendants contend that the evidence does not establish that Mr MacLennan possesses any confidential information in relation to the second action. That is because, they say, the second action was not commenced until after Mr MacLennan left Lavan Legal, and the plaintiff has produced no evidence which suggests that Mr MacLennan had any communications with Mr Zani relevant to the second action.

35 The plaintiff contends that it can be inferred by virtue of Mr MacLennan's involvement in the first action that he possesses extensive knowledge which is relevant to the second action. That inference is said to be able to be drawn from the fact that the two proceedings arise out of the same facts, and concern obligations which arise out of the same agreements. The plaintiff relies upon the passage from the judgment of Gillard J in Yunghanns v Elfic Ltd7 who said:

In some cases the circumstances of the retainer and the nature of the legal work will be sufficient to establish the nature of the confidential information. In this regard 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.

36 The defendants argue that the observation of Gillard J needs to be read in the context of the facts of the case in Yunghanns. That was said by Gillard J to be an unusual case, in that as Mr Yunghanns had a very close relationship with the firm concerned spanning some 30 years, and had been employed by the firm as a solicitor for the term of approximately five years. Legal work had been performed by the firm for Mr Yunghanns and his group over a period of about 16 years. During the 30-year period of Mr Yunghanns association with the firm, he had come to know many of the partners and employees of the firm who had many opportunities to form opinions as to his 'modus operandi in business and legal work'. The firm had advised Mr Yunghanns' group in connection with numerous business and corporate transactions. Justice Gillard referred to evidence that Mr Yunghanns had numerous meetings with the partners and staff of the firm during which strategy, risks and returns in litigation, takeovers and other business dealings were discussed on a full and frank basis. Justice Gillard described as a significant point that, as a result, the persons with whom he had such meetings obtained an intimate understanding of his approach to those matters. Acceptance of that proposition led Gillard J to conclude that Mr Yunghanns had provided substantial information of a confidential nature to the firm when it was acting for him and his group.

37 It is true that the relationship between Mr Zani and his companies and Lavan Legal was of much shorter duration. The evidence does not go beyond establishing that Lavan Legal, and Mr MacLennan in particular, acted for Mr Zani only in relation to the first action. It is of particular significance in this case, however, that the second action arises out of the same agreements as are relied upon in the first action. Although the facts said to constitute alleged breaches are different in the second action, the approach by Mr Zani to the second action is likely to be similar to, or the same as, his approach to the first action. Both actions arise from a breakdown of the relationship between Ezeatm and Mr Zani. In my view, it is reasonable to infer that, through his privileged and confidential communications with Mr Zani, Mr MacLennan would have learnt much about Mr Zani's attitude to litigation with his former employer, and his personal attitudes and attributes, which Mr MacLennan is not at liberty to disclose. I am satisfied that Mr MacLennan is in possession of confidential information relevant to the second action.

Is there a risk of disclosure?

38 It must be borne in mind that this is not a case where Bennett and Co seeks to act against its former client. Although it also covers the present circumstances, Bennett and Co's information barrier policy is clearly directed to protection from inadvertent disclosure of information held by the firm as a result of some earlier matter, where the firm seeks to act for another party which might be advantaged by disclosure of the earlier client's confidential information. Thus, the information barrier is designed to ensure that confidential information within the files and records held by the firm is not disclosed to those within the firm acting for a different client, with interests contrary to those of the person who has provided the confidential information. In this case, the only person with confidential information is Mr MacLennan, and it is accepted by the plaintiffs that Mr MacLennan has not disclosed any confidential information relating to the plaintiffs in this action since his resignation as a partner of Lavan Legal, and that, upon his resignation as a partner of Lavan Legal, Mr MacLennan did not take or retain any documents containing confidential information pertaining to the plaintiffs. It should also be noted that the plaintiffs accept the integrity both of Mr MacLennan, and of Bennett and Co, so that they accept that the only risk is a risk of inadvertent disclosure.

39 Notwithstanding that none of the information held by Bennett and Co (other than by Mr MacLennan) is confidential to the plaintiff. Nevertheless, Bennett and Co have implemented their information barrier policy in relation to all matters in respect of which they are acting for Ezeatm. Mr Chenu has deposed to the fact that all of the steps required to be taken by the information barrier policy have been taken. Mr Nathan Ebbs, a principal of Bennett and Co has been appointed the compliance officer for the Ezeatm matters. On 29 January 2014, Mr Ebbs conducted an audit of the information barrier in place with respect to the Ezeatm matters in compliance with the information barrier policy. In conducting the audit, he:

(i) conducted a review of the undertakings for the screened persons to MacLennan, himself as compliance officer and the involved persons;

(ii) conducted a review of the client consent to Bennett and Co acting on the basis that the firm's duty of disclosure did not extend to any confidential information that may be held within the firm as a result of Mr MacLennan's employment;

(iii) conducted a review of the log of actions on the files;

(iv) made a physical inspection of the hard copy files including that they were stored in a locked office and the key was secure; and

(v) conducted a review to ensure that warning labels were present on all hard copy files and that the door to the office containing the files also had a warning label.

40 On 31 January 2014, Mr Ebbs conducted a review to ensure that warning labels were present on any cupboard or drawer used to temporarily store documents or files relating to the Ezeatm matters in the offices of the solicitors working on the matter. He reviewed the computer system using Mr MacLennan's login to ensure that Mr MacLennan's access was restricted in respect to documents on the Ezeatm matters.

41 Following the audit, Mr Ebbs suggested that two changes be implemented to the information barrier; namely that an index of involved and screened persons be added to the compliance officer's file, and that Mr MacLennan be informed to refrain from visiting the corner of the office where work is being carried out on the Ezeatm files.

42 The plaintiffs contend that the steps put in place by Bennett and Co are inadequate to guard against the risk of inadvertent disclosure by Mr MacLennan of confidential information. They contend that the structure and size of Bennett and Co's practice militate against the conclusion that an information barrier can eliminate the risk of inadvertent disclosure. The plaintiffs contend that, given the relatively small size of the firm and the fact that Mr MacLennan works on the same floor of the building as legal and administrative staff working on the Ezeatm matters, it is not realistic to rely on the information barrier arrangements in place to avert the risk of disclosure.

43 The plaintiffs also place considerable weight on the fact that the confidential information known to Mr MacLennan relates to current, ongoing litigation in which Bennett and Co act against Mr Zani and his companies. That is an important feature, they argue, which distinguishes this case from cases where injunctions restraining solicitors from acting have been refused.8 In each of those cases, there was a significant lapse of time between when the confidential information was said to have been conveyed and the commencement of the work in respect of which the restraint on the solicitors was sought. In Gugiatti v City of Stirling9 and Durban Roodepoort Deep Ltd v Mark David Reilly & Glenn Robert Featherby (as administrators of the Deed of Company Arrangement of Laverton Gold NL (subject to Deed of Company Arrangement)),10 there was evidence that the solicitors concerned had no recollection of any confidential information conveyed to them by the former client.

44 The fact that the confidential information possessed by Mr MacLennan relates to current litigation requires very careful consideration of the adequacy of steps taken to eliminate the risk of disclosure. The inevitability of regular contact between Mr MacLennan and other lawyers or staff working on the Ezeatm matters also calls for critical analysis of the likely effectiveness of the information barrier. In my view, however, the steps which have been taken are adequate to ensure that no disclosure of confidential information will occur. The reasons for that conclusion are as follows:

(i) this is not a case where Bennett and Co has previously acted for the plaintiffs and thus has files or documents or records in its possession in which the confidential information is contained;

(ii) the information which requires protection is information possessed only by Mr MacLennan who is not in possession of any documents or records containing confidential information. Thus, disclosure could only occur by Mr MacLennan intentionally or inadvertently revealing what is in his mind;

(iii) it is not contended by the plaintiffs that Mr MacLennan is likely to intentionally disclose confidential information; and

(iv) the existence of the information barrier of which all staff are aware, and in respect of which they have received continuing education, greatly lessens any risk of inadvertent disclosure by Mr MacLennan, because the arrangements in place to isolate the Ezeatm matters from Mr MacLennan will serve as a constant reminder of the need for all concerned to avoid any involvement of Mr MacLennan with, or even casual conversation with him about, the Ezeatm matters.

45 In their submissions, the plaintiffs made some criticism of the fact that certain steps were taken in relation to the implementation of the information barrier after Mr MacLennan joined Bennett and Co. It is clear, however, that those directly involved in the Ezeatm matters had provided their relevant undertakings in advance of Mr MacLennan joining Bennett and Co. What occurred later, including the steps taken as a result of Mr Ebbs' audit of the information barrier, were simply further implementations of the information barrier having regard to changing circumstances, and in particular the opening of some new files for Ezeatm in January 2014. This is not a case where steps are taken by solicitors after an objection to their acting is made. The information barrier policy well predates Mr MacLennan joining Bennett and Co, and it was implemented in relation to the Ezeatm matters in advance of Mr MacLennan joining the firm, and in recognition of the potential problems. In my view, the further steps taken by Bennett and Co to implement the precautions against disclosure simply demonstrate the firm's consciousness of the need for extreme care to avoid any possibility of disclosure.

46 The defendant has satisfied the burden of establishing that it has taken effective steps to avoid any real or sensible possibility that any confidential information possessed by Mr MacLennan would come into possession of those within the firm acting for Ezeatm. It follows that the application for an injunction should be dismissed.

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1Tottle Christensen v Westgold Resources NL [2003] WASCA 224 [4] (the Court).
2Newman v Phillips Fox (a firm) [1999] WASC 171; (1999) 21 WAR 309.
3Bolkiah (Prince Jefri) v KPMG (a firm) [1999] 2 AC 222, 236 - 237.
4Ismail-Zai v Western Australia [2007] WASCA 150; (2007) 34 WAR 379; Zalfen v Gates [2006] WASC 296.
5Zalfen v Gates [2006] WASC 296 [69] (Master Newnes).
6Zalfen v Gates [2006] WASC 296 [72] - [73].
7Yunghanns v Elfic Ltd (Unreported, VSC, 3 July 1998).
8Gugiatti v City of Stirling [2002] WASC 33; (2002) 25 WAR 349; Durban Roodepoort Deep Ltd v Mark David Reilly & Glenn Robert Featherby (as administrators of the Deed of Company Arrangement of Laverton Gold NL (subject to Deed of Company Arrangement)) [2004] WASC 269; PhotoCure ASA v Queen's University at Kingston (2002) 56 IPR 86; Bureau Interprofessionnel Des Vins De Bourgogne v Red Earth Nominees Pty Ltd (t/a Taltarni Vineyards) [2002] FCA 588.
9Gugiatti v City of Stirling [2002] WASC 33; (2002) 25 WAR 349.
10Durban Roodepoort Deep Ltd v Mark David Reilly & Glenn Robert Featherby (as administrators of the Deed of Company Arrangement of Laverton Gold NL (subject to Deed of Company Arrangement)) [2004] WASC 269.