Bureau Interprofessionnel Des Vins De Bourgogne v Red Earth Nominees Pty Ltd

Federal Court of Australia|2002-05-09|Before: Ryan J

REASONS FOR JUDGMENT 1 By motion on notice dated 4 February 2002 the respondent, Red Earth Nominees Pty Ltd ("Red Earth"), seeks, amongst others, the following orders; "1. Pursuant to section 23 of the Federal Court of Australia Act 1976 that (a) Corrs Chambers Westgarth be enjoined or restrained from continuing to act as solicitors for the Applicants in this proceeding; and (b) Corrs Chambers Westgarth be enjoined from: (i) using to the detriment of the Respondent any confidential information of the Respondent; (ii) divulging any confidential information of the Respondent to any person save with the express consent of the Respondent. 2. ... 3. As to the costs of this motion. 4. Such further directions or other orders as the Court may deem appropriate." 2 The basis for Red Earth's motion is that two solicitors respectively acting for each side in this litigation have since joined Corrs Chambers Westgarth ("Corrs"), the solicitors presently acting for the applicants in these proceedings. Red Earth points, in particular, to the fact that Ms Ann Dufty, a solicitor currently engaged as General Counsel at Corrs, in her former capacity as partner and special counsel at Mallesons, Stephen Jacques ("Mallesons") acted for Red Earth at an early stage of the dispute between the parties and when the present proceedings were in contemplation. It is contended that Ms Dufty possesses confidential information belonging to Red Earth and relevant to matters in issue between the parties.

Are Corrs in a conflict of interests? 16 It is contended on behalf of Red Earth that Corrs should be restrained from acting for the applicants since a solicitor has a duty to avoid a conflict of interest in relation to a former client and a continuing duty to preserve the confidentiality of confidential information imparted during that relationship. In a related way it is said that Corrs are precluded from acting for the applicants because they have not taken steps sufficient to avoid the risk of Red Earth's confidential information possessed by Ms Dufty being disseminated within Corrs. 17 The applicants deny the existence of any conflict of interest in the present circumstances. In this context, Mr Archibald referred to Prince Jefri Bolkiah v KPMG (A Firm) [1999] 2 AC 222 ("Bolkiah"), where Lord Millett, with whom the rest of their Lordships agreed, said, at 235: "Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence. Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own." 18 I respectfully agree with that analysis. As there is no suggestion that Corrs or Ms Dufty is presently retained by Red Earth, there can be no question of a conflict of interest. A court will usually intervene in a case in which a solicitor is employed by or becomes a partner in a second firm which is acting in proceedings against the solicitor's former client only to prevent a misuse of confidential information. However, Australian courts have also shown a willingness to intervene in the exercise of their inherent power to control the conduct of solicitors who are their officers: (see Yunghanns v Elfic Ltd (unreported, Supreme Court Vic, Gillard J, 3 July 1998) One example of this approach is to be found in the judgment of Brooking JA in Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248, where his Honour supported the grant of an injunction against solicitors on what he identified as three independent bases; first, the danger of misuse of confidential information; secondly, a breach of the fiduciary duty of loyalty and thirdly, the desirability of restraining solicitors as officers of the Court. 19 There is no suggestion by the applicants that Ms Dufty personally should be entitled to act for them in relation to any issue in dispute between the parties. The only question is whether Corrs should be permitted to continue to act for the applicants.

The nature of the confidential information. 20 As Red Earth seeks to restrain Corrs from acting at all, it must first identify the confidential information possessed by Ms Dufty which could now be disclosed by her to its disadvantage. Once the information has been identified, the Court can consider whether adequate steps have been taken to prevent the deliberate or inadvertent disclosure of that information within Corrs: (Carindale Country Club Estate v Astill (1993) 42 FCR 307 per Drummond J, at 313; D & J Constructions Pty Ltd v Head (t/as Clayton Utz) (1987) 9 NSWLR 118, per Bryson J, at 124). 21 Mr Bailey of Counsel for Red Earth in his written outline of argument identified the confidential information as follows; "7. Ms Dufty was in possession of relevant confidential information: By virtue of having acted for the Respondent whilst she was a partner or Special Counsel with Mallesons for a significant period of time, between 1993 and 1999 … ... , Ms Dufty acquired various types of confidential information belonging to the Respondent relevant to the foregoing issues: a) She had knowledge of the Respondent's intellectual property assets, its strategies, its marketing and branding issues and policies as well as more general knowledge of its business, its personnel and attitude to litigation described generally as "getting to know you factors" relevant to the dispute between the Applicants and the Respondent … b) She advised the Respondent on the subject matter of the Applicant's within proceeding. ... ... ... ... .... Specific confidential and privileged information is exhibited to the affidavit of Elizabeth Kate Godfrey ... ... ... c) Even in her affidavit (paragraph 11) Ms Dufty assumes a course of action that the Respondent might adopt in response to this proceeding. This assumption must depend upon Ms Dufty's understanding of the Respondent's position. The fact that such a statement could be made by Ms Dufty is an indication of the problem of disclosure of confidential information and advice that the Respondent is concerned about. d) Some confidential information of the Respondent imparted to Ms Dufty relevant to the present dispute is also the subject of legal professional privilege (confidential exhibits to the affidavits of Elizabeth Kate Godfrey sworn 27 March 2002 and 4th April 2002). e) Ms Dufty is also aware of the Respondent's attitude and dealings with the Australian Government in the right of the Department of Primary Industry and Energy and the Australian Wine and Brandy Corporation and played an active role in the formulation of the Respondent's policy in respect thereof." 22 Mr Neil Fisher, the Sales Manager for Red Earth deposed on affidavit that, on at least two occasions in 1995, he sought and received legal advice from Ms Dufty regarding matters which are at issue in the present proceedings. Mr Fisher went on to state, at par 5 of his affidavit; "The matters discussed and advised upon were of strategic importance to the Respondent and included not only legal matters but matters of commercial importance, future plans and prospects for the Tache brand and how the matter should be approached and dealt with. I believe the content of those conversations would be of great interest to the Applicants ... ... ... " 23 Mr John Gafford Barker, a director of Red Earth deposed on affidavit that Ms Dufty had participated in the strategy and management of litigation in which it had been engaged and was privy to information about its commercial dealings in the wine industry. This work included, according to Mr Barker, the application for and registration of trade marks and advice in relation to the EC/Australian Wine Agreement and, more particularly, advice regarding the allegations now pressed by the applicants in these proceedings. 24 In support of Red Earth's contention, Ms Elizabeth Godfrey, a solicitor of DCC, deposed on affidavit sworn 27 March 2002 that she had inspected the files related to Red Earth handled by Ms Dufty while at Mallesons, some of which contained what was said to be confidential information and advice directly relevant to the dispute which is the subject of the present proceeding. Ms Godfrey exhibited to her affidavit a selection of the documents said to contain the respondent's confidential information. Subsequently Ms Godfrey made two further affidavits, both sworn 4 April 2002, annexing further documents from the files of Mallesons handled by Ms Dufty and said to contain the respondent's confidential information. In particular, the respondent identified exhibits EKG-1, EKG-8, EKG-29 EKG-34 to EKG-38, EKG-44 to the affidavits of Ms Godfrey as containing matters bearing upon the present litigation. 25 It was further submitted by Mr Bailey, that, while Ms Dufty had been acting for Red Earth at Mallesons, the strategic direction of that client had been shaped by an accumulation of exchanges between Ms Dufty and various officers and employees at Red Earth. There thus came into existence a body of Red Earth's confidential knowledge or information held by Ms Dufty. Mr Bailey submitted that this body of knowledge was not on the public record and it is not to the point that Ms Dufty had not taken any files or documents with her when she left Mallesons as it was almost impossible for her to disembarrass herself of sensitive strategic information of that kind. In this context, Mr Bailey referred to Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37, where Gowans J said, at 49; "There is very little in these English cases to enable one to identify a "trade secret". But some collation of the characteristics may be attempted, without trying to make it an exhaustive statement. Its subject-matter may not be a process in common use, or something which is public property and public knowledge, but if it is the result of work done by the maker upon materials which may be available for the use of anybody, so as to achieve a result which can only be produced by someone who goes through the same process, it will be sufficient." 26 Those comments were directed at the subject matter of a trade secret which is not at issue in the present case. In any event, I consider that Mr Bailey's proposition has been too broadly formulated. It is for Red Earth to identify with some precision the confidential information possessed by Ms Dufty. As Drummond J said, in Carindale Country Club Estate Pty Limited v Astill (supra), at 314; "It is a basic requirement that before material will be recognised as having the character of confidential information, the information in question must be identified with precision and not merely in global terms: Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434, 443; 74 ALR 428 and cf O'Brien v Komesaroff (1982) 150 CLR 310 at 327; 41 ALR 255. The requirement is insisted upon even though it may necessitate disclosing to the court the very information the confidentiality of which it is sought to preserve by the action. This requirement has its foundation in the need for the court to be able to frame a clear injunction, should relief against misuse of confidential information be granted." 27 The applicants' primary contention is that Ms Dufty does not possess any confidential information relevant to these proceedings that is susceptible of passing from her to anyone else in Corrs, and in particular to Mr Stern's group. The applicants also deny that the documents annexed to the affidavit of Ms Godfrey contain confidential information and contend that, even if Ms Dufty has possessed confidential information of the respondent in the past, she no longer possesses such information, either in document form or in her memory or recollection. 28 In her affidavit Ms Dufty has deposed that her primary contact with the respondent was through Mr Dominique Portet, who was responsible for the day to day decision making within Red Earth and who provided her with most of her instructions. According to Ms Dufty, Mr Portet resigned as a director of Red Earth in about 1998 or 1999. At par 9 of her affidavit, she went on to say; "9. Mr Portet was replaced by someone, whose name I cannot recall. To the best of my memory: (a) I provided no substantive legal advice whatsoever to the Respondent from that point onwards; (b) I had very limited dealings with the Respondent and I think that I wrote only two or three letters to the Respondent; (c) Those letters, and indeed all my dealings with the Respondent, were addressed to Mr Portet's successor or his secretary and they were primarily concerned with the payment of certain invoices that I had sent to the Respondent before Mr Portet's departure and which had not been paid; (d) There was no correspondence with anyone at the Respondent in relation to this matter; and (e) As far as I can remember I did not at any stage meet Mr Portet's successor, all correspondence with him being either in writing or by telephone." 29 In par 11 Ms Dufty has sworn; "Upon leaving Mallesons in August 2000, I did not retain any documents, either in hardcopy or electronic form, relating tho this matter. I cannot recall any confidential information of the Respondent that could in any way be relevant to this matter (including knowledge of the Respondent's legal strategies and attitudes) though I assume that it is likely that the Respondent will continue to resist any suggestion that it should give up its registered trade mark ... ... ... Apart from the very limited dealings which I had with the new management to which I refer in paragraph 9 above I have had no contact with the Respondent since Mr Portet's departure." 30 In the light of the evidence, including, in particular, some of the exhibits to Ms Godfrey's affidavits which have been identified by Counsel for Red Earth as having a bearing on the present litigation, I am prepared to assume that Ms Dufty, in the course of acting for Red Earth whilst at Mallesons, acquired information which, at that time, was confidential. On that assumption, it is necessary to consider whether Ms Dufty continues to possess any relevant information of the requisite confidential character. 31 As set out above, Ms Dufty has sworn that she had very limited contact with Red Earth after Mr Portet's resignation from that company and that she did not retain any of its documents or material brought into existence at its behest. She has also deposed that she does not recall any confidential information of Red Earth which is relevant to the present proceedings. Ms Dufty was not cross-examined and I accept her evidence that, upon leaving Mallesons, she did not retain any documents belonging or related to Red Earth. However, possession of confidential information is not synonymous with retention of copy documents or other tangible objects. 32 An impression or recollection of information exchanged between, or created by, two or more persons may be retained by a participant in the process notwithstanding that no record embodying that information was ever brought into existence or preserved. Indeed, the very need to maintain the confidentiality of the information and to confine it to those with a need to know, may explain a deliberate abstention from embodying it in a document or the subsequent destruction of any contemporaneous notes. However, if information of that kind, relevant to Red Earth's conduct of the present litigation, had passed between Ms Dufty and Mr Portet, it would be most improbable that she would not now recall it. I therefore conclude that she was not privy to any information possessed by Red Earth which remains confidential to it. I am reinforced in this conclusion by the lapse of time since Ms Dufty ceased to act for Red Earth and the likelihood that any strategy which may have been conceived, or fact which may have been identified, as answering the applicants' case has already been, or will shortly be, disclosed to the applicants' advisers by way of correspondence or in pleadings in the present proceedings. It is significant in this context that neither Mr Portet, the former director of Red Earth most directly involved in instructing Ms Dufty, nor Mr Nelson, the partner of Mallesons who, presumably, continues as a director of Red Earth, has attempted to identify any piece of confidential information entrusted to Ms Dufty which could now be disclosed by her to Red Earth's detriment.

Is Ms Dufty's knowledge to be imputed to other solicitors within Corrs? 33 Even if the conclusion just reached were wrong and it should be found that Ms Dufty is in possession of confidential information belonging to the respondent, it remains to be considered whether her knowledge should be imputed to other lawyers of Corrs. 34 It is now well established that the knowledge of a solicitor joining a new firm should not automatically be imputed or attributed to other lawyers or employees at that firm (see Re a Firm of Solicitors [1992] QB 959 at 973, per Staughton LJ; Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 17 WAR 98, per Ipp J at 110-111; Newman v Phillips Fox (1999) 21 WAR 309, per Steytler J; Bolkiah (supra) at 235). As Lord Millett said in Bolkiah, whether a particular individual is in possession of confidential information is a question of fact to be proved or inferred from the circumstances of the case: (Bolkiah at 235. See also the observation of Steytler J in Newman v Phillips Fox (supra)at 317). 35 In her affidavit, Ms Dufty stated at par 14; "14. Since joining Corrs Mr Stern has mentioned to me that this matter has been ongoing. He has also mentioned to me the allegations that have been made by the Respondent concerning a possible conflict of interest in Corrs acting for the Applicants. In my general discussions with Mr Stern and other staff at Corrs, I have been extremely careful to avoid (and have avoided) discussing (or even referring to) any substantive aspect of this matter." 36 Ms Dufty has also deposed that, since she joined Corrs, her secretary has been Ms Melinda Farfalla who did not work with her at Mallesons. On the evidence before the Court, the only person, legally qualified or otherwise, now at Corrs, who previously worked with Ms Dufty at Mallesons is Ms Helen Mason, a registered trade mark attorney. Ms Mason was the Trade Mark Manager at Mallesons from 1996 to 2000. In that capacity she did not provide legal advice to clients and, in particular, did not perform any work on the Red Earth file involving the issues presently in dispute between the parties. 37 There is no evidence before the Court to support a finding that anyone at Corrs other than Ms Dufty has been in possession of any confidential information belonging to the respondent relevant to the issues in dispute between the parties. Consequently, on the assumption indicated at [33] above that Ms Dufty does possess relevant confidential information belonging to Red Earth, it is necessary to assess the risk of disclosure of that confidential information to the applicants or their advisers. 38 Red Earth relies on the judgment of the House of Lords in Bolkiah as indicating that once the former client shows that confidential information has passed to the solicitor, the solicitor carries the burden of proving that there is no risk of disclosure. It is further contended that a strict application of that principle is necessary in this case because the information in question is not only confidential but also protected by legal professional privilege. 39 In Bolkiah, Lord Millett observed at 236 -237: "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 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 and theoretical. But it need not be substantial. ... ... ... 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, 77 DLR (4th) 249, 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." 40 The applicants contend that the relevant onus of proof is on Red Earth and the correct approach is that indicated by Hayne J in Farrow Mortgage Services Pty Ltd (In Liq) v Mendall Properties Pty Ltd (1995) 1 VR 1 and Drummond J in Carindale Country Club Estate Pty Ltd v Astill (supra). 41 In Farrow Mortgage v Mendall Properties, Hayne J said, at 5; "Although it is necessary to be acutely conscious of the fact that the court is asked to interfere with the right of a litigant to be represented by the solicitor of the litigant's choice, it is not necessary to conclude that harm is inevitable (or well nigh inevitable) before acting to restrain a possible breach of the duty that a solicitor owes to clients and former clients to keep confidential information given to the solicitor in confidence and not use that information against the interests of the client who gave it to the solicitor. It is enough to say that I consider that an injunction should go if there is a real and sensible possibility of a misuse of confidential information." 42 The words "real and sensible possibility" had earlier been used in Mallesons Stephen Jacques v KPMG Peat Marwick (1990) 4 WAR 357 at 362 where Ipp J considered that a court should intervene "when there is a real and sensible possibility that the solicitor's duty and interest might conflict". 43 In Carindale County Club Estate Pty Ltd v Astill, Drummond J said, at 312; "In my opinion, a solicitor is liable to be restrained from acting for a new client against a former client if a reasonable observer, aware of the relevant facts, would think that there was a real, as opposed to a theoretical possibility that confidential information given to the solicitor by the former client might be used by the solicitor to advance the interests of a new client to the detriment of the old client." 44 In some cases in the Family Court a stricter approach has been adopted. For example, Frederico J, in In the Marriage of Thevenaz (1986) 84 FLR 10, held a restraint to be justified if there was a risk that confidential communications on relevant matters had been made by the former client even though the risk might be more theoretical than practical. In earlier cases in other jurisdictions the 'real and sensible possibility' test has been applied. More recently, however, several Australian courts have taken the approach indicated in Bolkiah of requiring the former solicitor to discharge the burden of proving that effective steps have been taken to prevent disclosure (see Newman v Phillips Fox (supra) at 322; Pradham v East Side Day Surgery Pty Ltd (unreported) 18 June 1999, Full Court of Supreme Court of South Australia; World Medical Manufacturing Corporation v Phillips Ormonde & Fitzpatrick Lawyers (unreported) SC Victoria (18 May 2000) per Gillard J, at [120]). 45 In the last mentioned case Gillard J discussed what he saw to be the difference between the approach of Hayne J in Farrow Mortgage and that taken by the House of Lords in Bolkiah, saying, at [115] - [116]; "Lord Millett is placing an onus upon the confidante in that if the court is satisfied that confidential information has been imparted which could be adverse to the interests of the former client then it should grant the injunction unless it is satisfied that there is no real risk of disclosure. Hayne J in my opinion puts the onus upon the plaintiff seeking the injunction to show there is a real and sensible possibility of the misuse of confidential information." 46 After examining many of the authorities, Steytler J in Newman v Phillips Fox (supra) adopted the test in Bolkiah and went on to say, at 322: "There is in my opinion little practical difference between that test and the test adopted in such cases as Mallesons and Farrow Mortgage Services. Indeed it seems to me that the test applied in Carindale Country Club Estate, referred to by Lord Millett in Bolkiah (at 237), is no different from, and refers to and relies upon, that expressed in Mallesons (see the judgment of Drummond J (at 116)). If there is any difference in degree between "a real and sensible possibility" of misuse of confidential information and no "real" risk of disclosure as opposed to one which is merely "fanciful or theoretical" then it must, in my opinion, be slight. Moreover any additional stringency which might be comprehended by the test espoused by the House of Lords when coupled with a shifting of the evidential burden is, in my opinion, justified by the need to safeguard the proper administration of justice, that being the most important of the policy considerations to which I have referred." 47 I agree with Steytler J that there is little practical difference between the test postulated by Lord Millett in Bolkiah and that applied in Mallesons and Farrow Mortgage Services referred to above. As Gillard J said, in World Medical Manufacturing Corporation (supra), the crucial difference in approach may be in the allocation of the burden of proof. However, even taking the view, more favourable to Red Earth, which was espoused by the House of Lords in Bolkiah, I have concluded that the applicants have discharged the burden of proving that there is no real risk of disclosure of the confidential information presumptively acquired by Ms Dufty.

Discharge of the burden of negativing risk of disclosure. 48 It was contended on behalf of Red Earth that the applicants had not discharged their evidentiary burden because the measures taken by Corrs, commonly said to constitute a "Chinese wall", were inadequate to prevent the risk of disclosure or leakage of Red Earth's confidential information which, for this part of the argument, I have assumed to be possessed by Ms Dufty. In particular, it was said that the "Chinese walls" had been erected ad hoc and too late, having been instituted only in response to the letter from DCC to Corrs dated 5 December 2001 outlining Red Earth's concerns. Although it can be assumed that "Chinese walls" of the kind proposed by Corrs will generally be effective to prevent deliberate disclosure of confidential information, it was contended on behalf of Red Earth that they would not acceptably guard against accidental or inadvertent dissemination in this case. 49 Mr Bailey for Red Earth argued that there was no satisfactory evidence of any attempt by Corrs to consider whether there was the possibility of a conflict of interest at the time when Ms Dufty joined that firm. In those circumstances, it was said, the appropriate inference to draw is that no institutional measures were adopted and, accordingly, the respondent cannot be satisfied that there has not been inadvertent disclosure of confidential information within Corrs generally and in particular, within its intellectual property group. 50 In a related way it was argued that, having regard to the knowledge which both Ms Dufty and Mr Stern had brought to Corrs possessed from their previous firms and retainers, it was incumbent upon them to avoid any perception that confidential information acquired on behalf of Red Earth by Ms Dufty might pass to Mr Stern or anybody else within Corrs. 51 The applicants contended that if Ms Dufty did possess any confidential information belonging to the respondent, there was no real risk of its disclosure or dissemination to anyone else within Corrs. Support for this contention was derived from the undertakings given to the Court, the uncontested affidavit evidence of Ms Dufty and Mr Stern, the fact that Ms Dufty only works two days a week in a discrete area of the intellectual property group and is a senior practitioner with a strong appreciation of her duty to Red Earth as her former client. 52 Both Mr Stern and Ms Dufty have sworn that Corrs have instituted the measures numbered 1-15 in Mr Darvall's letter to DCC dated 12 December 2001 to alleviate the respondent's concerns. In the light of all these circumstances, the applicants contended, the measures taken by Corrs are sufficient to eliminate any risk of disclosure of whatever confidential information may be possessed by Ms Dufty. 53 I have already indicated that I am satisfied that no confidential information has already been imparted, whether deliberately or inadvertently, by Ms Dufty to any other person at Corrs. Accordingly, it is necessary now to consider whether the measures which Corrs have taken are sufficient to prevent any real risk of disclosure in the future of the information possession of which is imputed to Ms Dufty by this part of the analysis. 54 At the outset it is to be remembered that there is no principle or rule of law that "Chinese walls" or arrangements designed to quarantine information to a particular person or part of an organisation can never eliminate the risk of disclosure of confidential information. As Lord Millett said in Bolkiah, at 529: "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." 55 Nevertheless, courts have shown considerable reluctance to assume the efficacy of such measures where, without them, the risk of disclosure is real. Sopinka J in MacDonald Estate v Martin (1991) 77 DLR (4th) 249 observed, at 269; "Moreover, I am not convinced that a reasonable member of the public would necessarily conclude that confidences are likely to be disclosed in every case despite institutional efforts to prevent it. There is, however, a strong inference that lawyers who work together share confidences. In answering this question, the court should therefore draw the inference, unless satisfied on the basis of clear and convincing evidence, that all reasonable measures have been taken to ensure that no disclosure will occur by the "tainted" lawyer to the member or members of the firm who are engaged against the former client. Such reasonable measures would include institutional mechanisms such as Chinese walls and cones of silence. These concepts are not familiar to Canadian courts and indeed do not seem to have been adopted by the governing bodies of the legal profession. It can be expected that the Canadian Bar Association, which took the lead in adopting a Code of Professional Conduct in 1974, will again take the lead to determine whether institutional devices are effective and develop standards for the use of institutional devices which will be uniform throughout Canada. Although I am not prepared to say that a court should never accept these devices as sufficient evidence of effective screening until the governing bodies have approved of them and adopted rules with respect to their operation, I would not foresee a court doing so except in exceptional circumstances." 56 In D & J Constructions Pty Ltd v Head (supra), Bryson J said, at 122-123; "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 communication should be made among partners or their employees. The new client would have to join in such an arrangement and give up his right to the information held by such parties and staff as held it. Enforcement by the court will 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 communication 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." 57 Likewise, courts have been understandably reluctant to accept undertakings by members of staff engaged on the relevant work as adequate protection where there is a real risk of disclosure. In Bolkiah, Lord Millett said, at 530: "In my opinion an effective Chinese wall needs to be an established part of the organisational structure of the firm, not created ad hoc and dependent on the acceptance of evidence sworn for the purpose by members of staff engaged on the relevant work." 58 In Newman v Phillips Fox (supra) Steytler J found that a proposed Chinese wall was inadequate to eliminate the risk of an inadvertent disclosure despite the best intentions of the parties and the impeccable standing of the firms involved. In that case the proposed wall was designed to protect extensive amounts of confidential information relating to an arbitration and imparted by the plaintiff to its original solicitors, Hely Edgar. The information had been imparted to an employee solicitor who was acting under the supervision of one of the firm's partners. The original firm, Hely Edgar, was later dissolved and the employee solicitor, a partner and two articled clerks joined Phillips Fox, the solicitors for the defendant in the arbitration. In addition, several members of the support staff from Hely Edgar also became employed by Phillips Fox. In reaching his conclusion that the proposal was inadequate, Steytler J was influenced by a number of matters including the fact that the proposal came some months after the staff had moved to Phillips Fox, and was unaccompanied by any educational program or procedures, monitoring and record keeping or disciplinary sanctions. As well, his Honour found that no adequate safeguards against disclosure by the administrative staff who had moved to Phillips Fox appeared to have been built into the proposed "Chinese wall". 59 In Bolkiah, the House of Lords found that the protective measures which had been instituted by KPMG were ad hoc and inadequate in the circumstances. The plaintiff in that case, Prince Jefri Bolkiah, had been the chairman of an investment agency until his removal in 1998. Prince Jefri had retained KPMG to act for him or one of his private companies in private litigation over a period of eighteen months. In the course of acting for Prince Jefri, KPMG had been entrusted with, or had acquired, extensive confidential information about his financial affairs. Some 168 persons worked on the litigation for Prince Jefri, which was eventually settled. Subsequently Prince Jefri was dismissed from his position as chairman of the investment agency and the Government of Brunei commenced an investigation into the conduct of the affairs of the agency including the destination and location of money that had been disbursed while Prince Jefri had been its chairman. The Government wished to retain KPMG to assist in the investigation. KPMG took the view that they could accept instructions as they had ceased to act for Prince Jefri some two months earlier, and could erect a "Chinese wall" around the department which was to carry out the investigation. KPMG employed some fifty people to work on the investigation for the Government of Brunei. Staff were appointed to the investigation after KPMG had satisfied itself that they were not in possession of confidential information relating to Prince Jefri. Work performed in London was done in a separate room with restricted access to the building. Several other measures were adopted including the dedication of a separate computer file server to use in the investigation and the deletion from KPMG's server of electronically stored information relating to Prince Jefri's work. 60 In my view, the facts of the present case are readily distinguishable from those in Newman v Phillips Fox and Bolkiah. On the evidence which I have accepted, the only person at Corrs who might be in possession of the respondent's confidential information is Ms Dufty. As already indicated, I am not persuaded on balance that she does now possess information of the requisite confidential character. In any event, she is a highly experienced practitioner, engaged as a part-time employee, working two days a week. Her work is primarily concerned with trade mark prosecutions, a distinct sub-group of Corrs intellectual property group. On her evidence, which I accept, Ms Dufty's work involves a high degree of independence from the other members of the intellectual property group; she signs her own correspondence and although Mr King oversees her practice, he has nothing substantive to do with the files handled by her. I also accept Ms Dufty's evidence that, upon leaving Mallesons, she did not retain any documents related to Red Earth's affairs. In these circumstances, and in light of the measures taken by Corrs, I am satisfied that there is no real risk that any relevant confidential information, assuming, contrary to my earlier finding, that Ms Dufty possesses some, will come into the hands of those solicitors and support staff at Corrs entrusted with the conduct of the present proceedings on behalf of the applicants.

Conclusion 61 As both of my findings on the possession of confidential information and the risk of disclosure uphold the contentions of the applicants, it is not necessary for me to evaluate the discretionary consideration of prejudice to them if denied the solicitors of their choice. Nor, in the light of those findings, is it necessary to consider whether an injunction should go in the exercise of the Court's jurisdiction to supervise the conduct of solicitors as its officers. 62 For these reasons, Red Earth's motion will be refused. Partly because the applicants' had been minded to pursue a similar motion, I was inclined to order that the costs of each party of the motion on notice dated 4 February 2002 should be costs in the cause. However, in case there are factors which have not been revealed or debated which may bear on the Court's exercise of discretion as to those costs, I shall order that they be reserved. I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.

Counsel for the Applicant: Mr A C Archibald QC with Mr M Settle

Solicitors for the Applicant: Corrs Chambers Westgarth

Solicitors for the Respondent: Davies Collison Cave

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