Confidential information and change of solicitors

Confidential information and change of solicitors

Redden & Pennington

Resolution

68. The court must consider two discrete but inter-related issues in resolving the parties’ competing applications. Firstly, did Ms Redden release confidential information to Ms Fox and Ms Mason between early 2011 and late 2012, which remains available to Ms Mason and so to Mr Adey, which may, in turn, lead to the firm of Norman Waterhouse possibly breaching its fiduciary duty to Ms Redden, who is a former client of the firm, albeit briefly.
69. Secondly, does the previous involvement of Norman Waterhouse, with both the applicant and respondent, in the current proceedings before the court, invoke the application of the court’s inherent supervisory jurisdiction over its officers and require the restraint of Mr Adey from acting in the overall interests of justice.
70. These considerations are discrete and I will approach them as such. However, depending on the circumstances of the case concerned, they have the potential to become interconnected. The first ground has been characterised as being narrow or technical in nature, depending upon the aggrieved person establishing actual prejudice being accorded to him or her, in any subsequent litigation ensuing, involving the legal practitioner sought to be removed.
71. As such, it is likely to be more amenable to circumstances involving large corporations, which have the potential to be involved in commercially based litigation with a broad range of opponents, on perhaps a constant basis. Such entities are therefore likely to access a broad range of legal services, as will the entities opposed to them.
72. Necessarily, this has the potential to lead to solicitors and barristers acting for or against entities with which they have previously been involved in earlier litigation. In these circumstances, it has been held that it is necessary to establish a risk of real mischief or prejudice to justify the court’s intervention before a legal practitioner is restrained.^[9]
73. The second ground is broader in nature and is likely to be more amenable to family law proceedings which are extremely sensitive in nature and, as a consequence, have the potential to elicit powerful emotional responses from those involved in them. In addition, family law is an area, which invariably involves individuals, who have no or little personal experience of litigation.
74. In these circumstances, matters of public perception are likely to be more significant in the exercise of a discretionary remedy. As such considerations relating to the appearance of how justice is seen to be done are likely to be germane to the exercise of the discretion.
    1. Confidential Information
75. The relationship between client and solicitor is “one of the most important fiduciary relationships known to the law.”^[10] Disclosures made to solicitors, by their clients, are subject to legal professional privilege. It is in the public interest that communications between clients and their solicitor be kept secret, as this encourages clients to “make a full and frank disclosure of the relevant circumstances to the solicitor and, in turn, this has the consequence of “assisting and enhancing the administration of justice”.^[11]
76. Deane J in Baker v Campbell^[12] identified the principle underlying legal professional privilege as being “that a person should be entitled to seek legal advice without the apprehension of being prejudiced by subsequent disclosures of confidential communications”.
77. In Carindale Country Club Estate v Astill^[13] Drummond J, in summarising these authorities, said as follows:
    “It would be inconsistent for the law to encourage a client to repose confidential information in a solicitor by making those confidences privileged from disclosure without the client’s consent, if the law, on the other hand, were to readily allow the solicitor to act for a new client in a matter adverse to the interests of the old client…”
78. However, there is no general principle that a solicitor is to be forever restrained from acting against a former client, notwithstanding the understandable criticism of lawyers who “change sides”.^[14] It is also in the public interest that individuals should be free to retain the solicitor of their preference.
79. In Carindale Country Club Drummond J expressed the test to be applied as to whether a solicitor should be restrained from acting against a former client as a consequence of the possible disclosure of information given in confidence in the following terms:
    “… the cases all indicate that before a solicitor will be restrained from acting for a new client at the behest of an old client, not only must there be a threat of disclosure of evidence given in confidence, but there must be evidence that such disclosure will be to the former client’s disadvantage.”^[15]
80. As such, there must be proof of detriment, to the initial client concerned, before the solicitor in question is restrained from acting. In Carindale Country Club it was determined that no such restraint would be applied if the confidential information was remote from the fresh retainer for the new client concerned.
81. In Mintel Heerey J accepted that it was necessary, for an applicant seeking to restrain a former solicitor from acting, to identify and establish the nature of the confidential information provided. He also accepted that this issue was likely to turn upon the circumstances prevailing, which could include the following:
    • the information could not be specified because that, of itself would represent a detrimental disclosure;
    • the solicitor concerned may have made notes and observations, which the client concerned had subsequently forgotten;
    • during the course of the retainer, the solicitor concerned may have, either directly or even subconsciously, learnt a great deal about the client concerned, particularly in terms of tactics, overall veracity and other potential strengths and weaknesses of his/her character, which may be useful or open to exploitation in subsequent litigation;
    • These factors were summarised under the rubric of “getting to know you factors”.
82. In Magro & Magro, Rourke J was prepared to restrain a firm of solicitor from acting against a former client because there had previously been a lengthy retainer and therefore it was reasonable to infer that the solicitor in question would be:
    “…in possession of some privileged material belonging to the wife which could be put to good use by the husband. This might only consist of impressions of the wife’s personality gained after many hours of confidence, which could be exploited by a skilful advocate presented with those impressions.” ^[16]
83. In the current case, the parties have each been exposed to the metaphorical blow torch of a trial, involving cross examination. In these circumstances, it seems to me that whatever knowledge Ms Mason has gained of Ms Redden’s personality is likely to be of limited utility in any subsequent proceedings, no matter how skilful Mr Pennington’s advocate may be. As a consequence of their long involvement with one another, both during their relationship and afterwards in their acrimonious litigation, each party is likely to be aware of where the pressure points lie in the other’s personality.
84. In Osferatu the Full Court applied the following passage of Bryson J arising in Mancini v Mancini:
    “It is of importance to observe that information generally is not protected; the protection available relates to confidential information, and is available to the person entitled to the confidence…Confidential information which once existed may no longer be confidential; it may no longer be available although it was communicated in the past; it may not be material to any use which might now be proposed to be made of the information. Without specificity a claim for protection cannot be defended or decided on any fair procedural basis…”^[17]
85. Mr Hemsley, counsel for the husband places significant reliance on this passage. He submits that the evidence currently available indicates that it was Ms Fox, rather than Ms Mason, who has primarily been Ms Redden’s legal practitioner and the dispute between the parties, in which Ms Mason had what Mr Hemsley would characterise as a tangential involvement is now long concluded.
86. That dispute played itself out in the public forum of a relatively long trial before Dawe J, in which both parties were cross examined and finding regarding credibility were made. As such, it is likely to be the case that each party knows a great deal about the other and how he or she reacts and behaves in the metaphorical crucible of contested legal proceedings.
87. Accordingly, against this background, none of the legal practitioners concerned – Ms Mason, Ms Fox, or Mr Adey is likely to have any tactical advantage in respect of alleged insights gained into the temperament or character of either of the parties, as these have been on public display for a significant period of time.
88. In this context, Mr Hemsley contends that firstly, Ms Redden has not indicated specifically what actual confidential matters, pertaining to her, remain accessible to Ms Mason and secondly, in the context of the parties’ public and very acrimonious dispute, it is difficult to deduce or even intuit what such material could possibly be, particularly given the effluxion of time since Ms Redden and Ms Mason had a professional relationship together.
89. In conjunction with these assertions, it would appear to be Mr Hemsley’s position that the so-called getting to know you factors cannot now be determinative, given the extent and public nature of the earlier parenting and property proceedings which concluded approximately four years ago. In short, he asserts that it is fanciful to assert that Ms Mason can provide any conceivable level of advantage to Mr Adey, in all these circumstances because of what she knew of Ms Redden around four years ago.
90. In this context, the Full Court in Osferatu placed significant reliance in what was said by Lord Millett in Prince Jeffri Bolkiah v KPMG (A Firm)^[18] regarding issues of confidentiality, which arose in the context of larger legal entities employing multiple solicitors in varying roles. The Full Court accepted the proposition that the risk that confidential material will be disclosed must be real and not merely fanciful and theoretical. At the same time, such risk need not be substantial.
91. As with this matter, in the Prince Jeffri case, the risk concerned arose as a consequence of a legal practitioner moving firms. Lord Millett said as follows:
    “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. There is no rule of law that Chinese walls or other arrangements of a similar kind are insufficient to eliminate the risk. But the starting point must be that, unless special measures are taken, information moves within a firm.”^[19]
92. In this context, the Full Court has identified three steps to consider:
    • Does the firm (or one of its members) have confidential information relevant to the former client concerned?
    • What is that information and is it relevant to the new matter in which the firm is proposing to act?
    • Is there a risk that it will come into the possession of the individual at the firm proposing to act for the other party?
93. In Osferatu the Full Court considered that these considerations needed to be balanced against each other in order to assess the degree of risk of confidential information being disclosed and what were the appropriate protective measures. Significantly the Full Court accepted the proposition of Lord Millett in Prince Jeffri that “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…” This onus lies with the person asserting the existence of confidential material.
94. In this case, I accept that Ms Redden and Ms Mason did have a professional relationship between early 2011 and late 2012. I also accept that Ms Redden is likely to have confided in Ms Mason, in the absence of Ms Fox from time to time and more so after Ms Fox left her employ which was after the settlement of the first round of children’s proceedings and prior to judgment being delivered in the property proceedings.
95. However, in my assessment, Ms Redden has not discharged the onus on her of establishing either what is the nature of any confidential material currently held by Ms Mason which may potentially cause her prejudice or, more significantly what is the real risk to her, if this material is utilised particularly in the context of the undertaking which has been proffered by Ms Mason to the court.
96. In the light of the following factors – Ms Mason’s undertaking; the effluxion of time since the professional relationship between her and Ms Redden concluded; the fact that the initial proceedings have concluded; and the uncertain nature of what has been asserted by the applicant as to what information she provided to Ms Mason which is likely to have currency in the present proceedings; – I am not satisfied that there is any real risk of disclosure of confidential information to Mr Adey from Ms Mason.
97. In particular, in the light of all these factors and given the public and protracted nature of the litigation between the parties; including the fact of judgment in one aspect of the proceedings; I am not persuaded that there is any merit to the submission made by Ms Redden that Ms Mason is likely to have an understanding of how she functions psychologically and tactically, which she will be able to convey to Mr Adey, even inadvertently.
    2. Inherent Jurisdiction of the Court
98. There is no dispute, between the parties, that the court has an inherent jurisdiction to restrain Mr Adey from acting, if it considers that it is appropriate to do so in the interests of justice. The jurisdiction is discretionary in nature. The discretion arises as an incident of the court’s jurisdiction to restrain solicitors from acting in a particular case, as a consequence of its inherent authority over its officers and to control its process, in aid of the administration of justice.
99. In Naczek & Dowler, the Full Court of the Family Court described the basis of the duty of legal practitioners to the court, which founds the discretion, in the following terms:
    “The duty to the court arises from the court’s concern that it should have the assistance of independent legal representation for the litigating parties. Preserving the integrity of the administration of justice, and in the appearance as well as the reality of independence, the duty underpins the court’s practical approach to its supervisory discretion.”^[20]
100. In Naczek the test to be applied in this inherent jurisdiction is:
     “…whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice.”^[21]
101. As previously indicated, the jurisdiction is to be regarded as exceptional and, as such, to be exercised with due caution. This is because there is also a significant public interest in litigants being able to have the lawyer of their choice and it has the potential to lead to the perception of unfairness if this choice is too readily abrogated.^[22]
102. It is the submission of Ms Dickson, counsel for the wife, that no reasonable individual would readily accept the prospect of Ms Mason appearing to have swapped sides after having acted, for the wife, in bitterly contested proceedings, with the appearance that she is now acting for the husband or, at the very least, is closely associated with the husband’s solicitor. Ms Dickson would contend that such a prospect is inimical to the overall interests of justice.
103. On the other hand, it is Mr Hemsley’s submission that any reasonable person, being informed of all the relevant facts, would not be concerned, as he or she would regard the prospect of any improper conduct as being more theoretical than actual.
104. In this context, the cases are not always easy to reconcile, with each turning on its own particular circumstances. In my view, in terms of the exercise of the discretion, it is largely a case of the court, to a great extent, attempting to interpret its own time and manners in respect of the conduct it would expect from practitioners appearing before it.^[23]
105. In Thevenaz & Thevenaz, Frederico J restrained a solicitor from acting for a party concerned in family law proceedings, where the solicitor’s firm had acted for both parties in several conveyancing transactions, including the purchase of the former matrimonial home, although the solicitor in question had not actually handled the transactions in question. His Honour said as follows:
     “It is of the upmost importance that justice should not only be done but be seen to be done. In the circumstances of the present case, there is a risk which may well be theoretical but still exists, that justice might not appear to be done.”^[24]
106. This is the nub of the submissions of Ms Dickson. She contends that, in matrimonial litigation, as opposed to commercial or other types of matter, the bar is set particularly high in respect of the court’s obligation to scrutinise the previous involvement of legal practitioners, in earlier proceedings or in other affairs of their previous clients, vis-à-vis the involvement of practitioners in subsequent proceedings involving such a former client.
107. In this context, Ms Dickson places particular weight on what was said by Bryson J in D & J Constructions Pty Ltd v Head & Ors trading as Clayton Utz.^[25] In the case reference was made to Thevenaz following which His Honour said as follows:
     “That Court took the view that restraint was justified if there is a risk that confidential communications on relevant matters have been made by the party for whom the solicitor has ceased to act, even if the risk is more theoretical than practical. It seems natural that a particularly careful view would be taken in family law business, as such litigation tends to be about highly confidential facts and a very wide range and circumstances can conceivably be relevant; the sensitivity which even the most reasonable of people feel about such litigation when they are engaged in it calls for careful measures to secure that not only justice is done but also that it is apparent that it is done, an appearance which not survive any general impression that lawyers can readily change sides.”
108. In D & J Constructions Bryson J also alluded to the efficacy of Chinese Walls and like measures in the following terms:
     “I would think that the court would not usually undertake attempts to build walls around information in the office of a partnership, even a very large partnership, by accepting undertakings or imposing injunctions as to who should be concerned in the conduct of litigation or as to whether communications should be made amongst partners of their employees … Enforcement by the court would be extremely difficult and it is not realistic to place reliance on such arrangements in relation to people with opportunities for daily contact over long periods, as wordless communications can take place inadvertently and without explicit expression, by attitudes, facial expression or even by avoiding people one is accustomed to see, even by people who sincerely intend to conform to control.”^[26]
109. Ms Dickson places significant emphasis on this passage, asserting that any reasonable person would be well alive to the risk of prejudice arising, to her client, by means of metaphorical nods and winks, even of an involuntary nature, passing between colleagues at any law practice, including Norman Waterhouse.
110. In Kossatz & Kossatz^[27] Mullane J referred to an English authority of the Court of Appeal In re A firm of Solicitors in which the relevant test was expressed as follows:
     “… where a reasonable man with knowledge of all the facts would say ‘If I were in the positon of the objector I would be concerned that, however unwittingly of innocently, information gained whilst the solicitor was acting for me, might be used against me’, the court should intervene.”^[28]
111. In Magro Rourke J approved D & J Constructions by making reference to what he described as the peculiar quality of family law litigation. In the case, Rourke J was concerned with what he characterised as bitterly contested property proceedings. I acknowledge that the circumstances pertaining to the parties in the present proceedings are tense, unhappy and contentious and have been for a significant period of time.
112. As previously indicated, the applicant wife, in Magro, had conferred with the solicitor sought to be restrained in considerable depth, in other contexts, prior to the property proceedings in question being instituted.That solicitor was, at relevant times, in the employ of the solicitors retained by the husband in the current proceedings but was not directly acting for the husband. In her oral evidence to the court, which was characterised as being emotional in nature, the wife had said of this solicitor “he knows my whole life and my past history.”
113. In my view, the evidence in this case indicates clearly that it was Ms Fox who was Ms Redden’s principle legal adviser during the course of the first set of proceedings. In this context, it is, I think, significant that Ms Redden followed Ms Fox to Burrell & Co, when she sought to enforce the property orders. As such, in my view, no reasonable by stander would readily conclude that Ms Mason remains in a position to know Ms Redden’s whole life. Certainly not Ms Redden’s life now some four years after she and Ms Mason ceased their professional relationship.
114. In Magro, the injunction sought was granted. Rourke J said as follows:
     “…it is the appearance of justice being done which is the determinant, and not the probability. If this be the correct principle the injunctive relief sought in the present proceedings is prima facie irresistible.”^[29]
115. The authorities of Thevenaz, D & J Constructions and Magro, as well as several others, were considered and approved by the Full Court in McMillan & McMillan.^[30] In the case, the Full Court dismissed an appeal from the wife, against a decision resulting in her solicitor being restrained from acting on her behalf because an unqualified law clerk, who had previously worked for the husband’s solicitor, had moved to work for her firm of solicitors.
116. The Full Court said as follows:
     “…when regard is had to that authority concerning the confidential position of a solicitor’s clerk, and to principles relevant to restraint of solicitors acting against former clients in the family law area, to the particular sensitivities in that area of the law (as recognised by Bryson J. in D & J Constructions and by Rourke J. in Magro), and to the need to maintain public confidence in the legal system, we have little hesitation in concluding that it was open to Wilczek J. to restrain the wife’s solicitors from acting in the matter on the basis of their employment of Mr Pitts.”
117. As was recognised by the Full Court in Osferatu, there is invariably an overlap between issues involving the possible use of confidential information and the inherent jurisdiction of the court to control process, particularly in cases where there are ostensible concerns that it would not be appropriate to permit a legal practitioner to continue to act.
118. In the current matter, for the reasons already provided, I do not consider that Ms Mason continues to have access to any confidential information relating to Ms Redden. The question which remains is whether a reasonable and independent by-stander, appraised of all relevant facts, would be disturbed at the prospect of Norman Waterhouse continuing to act for Mr Pennington. As Bryson J observed, it is a question of appearances.
119. In these circumstances, the court is directed to weigh the facts and assess the risks in the eye of reality.^[31] In my view, Ms Mason had a limited level of involvement with Ms Redden and has had no involvement with her for a period in excess of four years. She and Mr Adey, at different times, have joined the same legal practice. Ms Redden’s principle advisor has joined another practice.
120. It is undoubtedly the case that the parties have a very uneasy relationship with one another which has resulted in an extreme level of mistrust between them. It is to be expected that, as with Ms Redden, Mr Pennington wishes to have his preferred and trusted legal adviser, Mr Adey. In these circumstances, the court has been warned to beware of adventitious challenges to an opponent’s legal representation as a means of harassing that opponent.^[32]
121. In all these circumstances, I do not consider that any reasonable member of the community would be offended by the prospect of Mr Adey continuing to act for Mr Pennington, particularly in the light of the undertaking proffered by Ms Mason to the court.
122. As a consequence, I do not consider that the court’s discretion to control its processes, in the interests of justice, is engaged in the current matter. To the contrary, I consider that there is a real risk that such a person may well be offended at the prospect of Mr Adey being restrained on spurious grounds. Accordingly, I have reached the conclusion that the application should be dismissed.