Church v Price; Re O

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION PROTECTIVE LIST YOUNG J TUESDAY 1 AUGUST 2000

1 HIS HONOUR: I have before me two sets of notices of motion, one by each of the plaintiff and first defendant, each seeking an order that the solicitor acting for the other no longer act. 2 The proceedings concern O who is alleged by the plaintiff not to be capable of managing her affairs. The plaintiff is O's sister. The second defendant, Mrs Price, is O's niece who would appear on some of the evidence to have been a person who was for many purposes treated by O as her daughter. 3 For many years, the second defendant has been assisting O to manage her affairs. 4 In the last few years there have been disagreements between O and the second defendant. Some of these disagreements seem to have arisen because the second defendant suggested that O would need to leave her house and O was reluctant to do so. However, O has made serious allegations against the second defendant from time to time. 5 Matters came to a head when the plaintiff realised that the second defendant had sold O's house under the power of attorney that O had given her. I made orders in February 2000 appointing the Protective Commissioner receiver and manager of the estate and the matter of the house has now been dealt with. The present state of the case is that it will, all other things being equal, be heard finally by me on 14 August 2000. The issue will be whether O is or is not capable of managing her affairs. There are reports of two doctors and two consultant psychologists proffered by the plaintiff in support of her case, and there is also some evidence the other way. 6 The plaintiff is represented by Miss MacKenzie, solicitor, whose firm is Duncan & MacKenzie of Bankstown. Miss MacKenzie first met O when she came to Miss MacKenzie's office on 15 November 1997 for advice following the death of her husband. Miss MacKenzie handled the estate and advised O about her will. Miss MacKenzie continued to act for O in various matters, and in March 1999 was telephoned by O's next door neighbour who said that O would very much like to see her. Miss MacKenzie called on O, and O said that she was very worried about the power of attorney she gave her niece and suggested that the niece had sold O's car behind her back and had not accounted for the money and had committed various other misdemeanours. Miss MacKenzie made a further will for O. In December 1999, O telephoned Miss MacKenzie and O said she had been reconciled with her niece and wanted her restored in part to the will. Miss MacKenzie prepared a codicil.

7 In January 2000, Miss MacKenzie became alarmed at reports that O's house had been sold under the power of attorney. It may well be as a result of Miss MacKenzie's alarm that the plaintiff started the present proceedings on 11 February 2000. O, acting by Marsdens, Solicitors, seeks to prevent Miss MacKenzie from acting for the plaintiff on the basis that she was privy to confidential information provided by O. 8 There are two defendants to the proceedings, O and Mrs Price, O's niece. At the present time, O appears by Marsdens, Solicitors. The second defendant appears by Friend & Co. However, for a time Marsdens appeared for both defendants. The plaintiff opposes Marsdens acting for O. She says that not only have they not been properly authorised to do so because O is incapable of instructing them, but their representation of O is contaminated by the fact that they have acted for the second defendant in the same matter and that the interests of the second defendant and O may well be opposite because O has alleged that the second defendant has not accounted for the proceeds of her car and has otherwise "stolen money from me". 9 At the end of the hearing on 24 July 2000 I indicated that I would dismiss both sets of motions and give my reasons in due course. I am now fulfilling that undertaking. 10 In D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118, Bryson J considered that the Court, when considering whether it should restrain a solicitor from acting against a former client, was exercising the supervisory jurisdiction over solicitors even though the trigger for the exercise of the jurisdiction may be the breach of confidential information that the solicitor had in his or her possession. More recently, the cases seem to suggest that the question really is one of confidential information and if there is any real possibility at all of a solicitor using information obtained in confidence against a former client then there should be an order restraining the solicitor from doing so: Bolkiah (Prince Jefri) v KPMG [1999] 2 AC 222; Newman v Phillips Fox (1999) 21 WAR 309. 11 As I endeavoured to point out at an earlier stage in these proceedings, if it is alleged that a solicitor should not be acting for a party, the appropriate way of dealing with that question is to challenge the solicitor's retainer in the proceedings or alternatively, to commence a separate suit against the solicitor. What has been attempted to be done in the instant case was to issue a summons in the already commenced proceedings naming Miss MacKenzie as a defendant. I struck this summons out as just incompetent. However, there were notices of motion by both sides naming the solicitors as the respondents which were almost certainly not in proper form. There should have been two new suits against the solicitors. However, eventually I gave up insisting on proper procedure and dealt with the matter on the merits. 12 It must always be remembered that Protective matters are not adversary proceedings, at least in the usual sense. The only object of the proceedings, at least the only valid object, is to protect a person in need of protection. It may be that in the course of the Court's enquiry to see whether the person is in need of protection it will appear that a trusted relative who has been managing the affairs has not been completely loyal to the alleged incapable person. However, the only legal question is whether protection is necessary. 13 Accordingly, we are right out of the area, such as in a common law damages case, where forensic tactics are permitted. In a common law case it is not at all unknown for counsel to discover that a witness whom he or she thought might be called is adverse to the client and not call the witness. It is doubtful whether such liberty is available to people in the Protective List. It may be that the rule is that all the evidence on either side which goes to the question as to whether protection is needed must, pursuant to a litigant's duty to the Court, be produced. I do not wish to rule definitively on this at the present stage because there is in my list for hearing in a few weeks time a case alleging that information was fraudulently withheld from a Judge hearing a case in a Protective matter, asserting that that decision be set aside. I would rather leave the decision on this particular question to after it has been fully and properly argued: I will merely point out at this stage that the question is at least arguable. 14 It is often the case that a solicitor in the course of personal injury proceedings, particularly proceedings where the plaintiff has suffered head injuries, comes to the realisation through reading the medical reports or otherwise that the client may not be able to instruct him or her or that the client would be incapable of managing the sum of money likely to be awarded by the Court. When that happens the solicitor is placed in a dilemma. He or she has a duty to the client: and he or she has a duty to the Court. 15 In McD v McD [1983] 3 NSWLR 81, Powell J at 84 made it clear that as a general rule a solicitor in such a situation should not personally be the plaintiff in an application to declare the client incapable of managing his or her affairs. His Honour said that the proper course was for the solicitor to approach a relative or a friend to make the application, or lacking any of those, a trustee company; see also Re an Alleged Incapable Person (1959) 77 WN (NSW) 156. 16 It must follow that a solicitor in this situation, concerned with the well-being of his or her client, must be at liberty to disclose to the person making the application sufficient details about the client and his or her affairs for that person to make a meaningful application. 17 This has been the practice for many many years. There have never been any restrictions on solicitors either providing that information or from acting for the relative or friend or trustee company which makes the application . There is a saving of costs and a very small risk that this will prejudice the alleged incapable person. 18 It must be remembered that if the basis of the Court's jurisdiction to restrain solicitors is supervisory, then the Court, before making an order will take into account its usual practice and will not disqualify a solicitor from acting if he or she has been acting in accordance with the usual procedure of the Court. 19 If the basis is misuse of confidential information, then an applicant to have a solicitor disqualified will need to show: (a) that the information is indeed confidential under the usual tests, either because of an implied term in the retainer or because of equitable doctrines; and (b) that the disclosure in the course of the proceedings for protection is not protected by the public interest referred to by the English Court of Appeal in Parry-Jones v Law Society [1969] 1 Ch 1 and by Bowen CJ in Eq in Brayley v Wilton [1976] 2 NSWLR 495. 20 As to point (a), it must be remembered that not every piece of information that passes between solicitor and client in connection with their professional association is confidential; see Re Furney [1964] ALR 814. 21 I do not consider that it has been shown that any of the information which Miss MacKenzie has disclosed was confidential information or that there is any possibility of such information being disclosed in the future. Even if there were, point (b) is not proved. In all the circumstances I would have thought that there was a sufficient excuse for disclosing the information to the plaintiff and to the Court in the interests of justice which would be a reason why no injunction should be made. 22 Turning now to the case against Marsdens, the evidence is (though it was not known to the counsel and solicitors representing the plaintiff until the hearing of the motion) that the Protective Office has in fact authorised Marsdens to act for O. 23 There is always a problem for a solicitor as to whether he can act for an alleged incapable person. The practice in England as shown in Heywood & Massey Court of Protection Practice 12th ed (Sweet & Maxwell, London, 1991) at p 5 is to make an application ex parte to act for the person. It is noteworthy, as the Practice there says: "…it is the duty of the solicitor to advise the Court on behalf of the patient and, in co-operation with the receiver, to ensure that all relevant and necessary information respecting the patient and his affairs is brought to the notice of the Court and in due time."

The solicitor, when appointed is the solicitor for the alleged incapable person; see Re EG [1914] 1 Ch 927. 24 In NSW, the practice is to apply to the Protective Commissioner. The Protective Commissioner has in many respects a dual role rather like a liquidator of a company. Primarily he administers the estates of incapable people, but he also is the delegate of the Court in many situations. When authorising a solicitor to act on behalf of an alleged incapable person he acts as the delegate of the Court. The Court, having through its delegate, given Marsdens the appropriate authority, there is no ground for removing them as solicitors. 25 It may well be that in due course there will be a dispute if O is adjudged incapable between the manager of her estate and the second defendant. However, at the moment the interests of O and the second defendant are exactly the same, that is, they both wish to resist appointment of a manager to O's estate. To date I do not consider that the fact that Marsdens have acted for Mrs Price as well as O in the past is a reason why they should be disqualified. It may be that there is some confidential information of the second defendant that Marsdens have in their possession, but the second defendant is not making the application to have Marsdens prevented from acting for O. 26 Accordingly, I dismiss both motions. Hopefully the interlocutory skirmishing will now cease and we can determine, in the interests of O, whether she needs protection, and if so, what form that protection should take.

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