Kallinicos and Anor v Hunt and Anor

Supreme Court of NSW|2011-06-27|Before: Sackar J, Barrett J

Judgment 1The first defendant by notice of motion seeks to restrain Mr Gregory George of counsel from acting for the plaintiff (his mother) in these proceedings or from disclosing confidential information to her which had previously been communicated to Mr George by the first defendant in earlier proceedings in 2006. 2Orders are also sought to restrain the plaintiff's current law firm from acting further for her and/or from disclosing the same confidential information.

Factual Background 3In 2006 proceedings were heard before Barrett J in matter 2914/06. The second plaintiff in those proceedings Mr Mohammad Reza Ashrafinia (Mohammad) is the first defendant in these and another set of proceedings before this Court. 4The proceedings before Barrett J concerned a falling out between the plaintiffs and defendants in what was said to be either a quasi partnership or joint venture between the respective parties. Together they had operated a restaurant and night club at King Street Wharf in Sydney called La Cita. In those proceedings amongst other things a winding up of one of the corporate defendants was sought and a number of declarations were sought in respect of certain monies said to have been loaned for the purposes of the enterprise. Apart from one minor respect those proceedings were dismissed. 5There is no issue but that Mr George acted in those proceedings for the plaintiffs which included Mohammad. He was instructed by a Mr Marcel Kalfus, solicitor from the firm Pateman Legal. 6Mohammad affirmed an affidavit in those proceedings dated 24 May 2006. It may be that there were other affidavits prepared for him but that is the only one that is before this court. That affidavit purports to deal somewhat comprehensively with his involvement in the quasi partnership/joint venture. 7In paragraph 26 of that affidavit, Mohammad sets out a conversation, which he said took place at the end of April or early May 2003 with the person who was the third defendant in those proceedings. The point of the conversation appears to be that Mohammad was provoked to express his concern about the way in which the business was being run and in particular the way monies were being expended. In that conversation he was at pains to emphasise that he had invested his "family's money" and further expressed the concern that his "mother's house" may be exposed and placed in jeopardy as a result of the investment. It is accepted that the reference to his "mother's house" is to be taken to be a reference to a property known as 18 Brunton Place, Marsfield. That property is relevant to both sets of proceedings currently before this court.

Current Proceedings before the Court 8By amended statement of claim Mr Amir Ashrafinia (Amir), the brother of Mohammad, has brought proceedings (5545 of 2008) against Mohammad, as first defendant, seeking a number of declarations based upon the existence of a different alleged joint venture and further alleging breaches of fiduciary obligations alleged to have been owed by Mohammad to Amir. A declaration amongst other relief is sought to the effect that Mohammad's interest in the property at 18 Brunton Place Marsfield is held on constructive trust for the benefit of Amir. 9Those proceedings had been listed for hearing for six days commencing 27 June 2011 before me. 10When that matter came before me on 10 June I was formally told that these proceedings had been commenced (166674 of 2011) by the plaintiff, Ms Parvaneh Frakhrabadi (Parvaneh) the mother also of Amir. On that day I listed this matter and matter 5545 of 2008 for directions and Mr George of counsel appeared for Parvaneh. 11I was informed through counsel that in these proceedings both her sons, Mohammad (first defendant) and Amir (second defendant), along with her former husband Abbas Ashrafinia (Abbas) (third defendant) were all to be parties and in particular that she was claiming a declaration that Mohammad and Amir held the property at 18 Brunton Place, Marsfield on constructive trust for her. 12On 15 and 17 June both matters came back before me for directions. On the latter date I vacated the hearing of 5545 of 2008. I directed that it along with 166674 of 2011 be heard together and that evidence in one be taken as evidence in the other. Dates are yet to be fixed for the hearing of those matters. 13On 15 June I was also informed that an application would be made by Mohammad to restrain Mr George and his instructing solicitors from appearing in these proceedings.

The Retainer 14Mohammad has filed an affidavit of 15 June which sets out his involvement with Mr George in the matter before the Court in 2006. He was not required for cross-examination. There is no issue that Mohammad and others had retained Mr George in 2006 for the proceedings before Barrett J. 15Mohammad alleges he spent three or four full days with Mr George and disclosed various aspects of his financial circumstances which included the funding arrangements for the business venture of the restaurant/night club. He says he also told Mr George about his mother and father and further imparted information about the internal issues within the family including various "problems and fights". 16By reference to his earlier affidavit of 24 May 2006, in particular paragraph 26, it is clear that he must have discussed with Mr George use of his family's money for the restaurant investment and the fact that the property at Marsfield which he appears to have regarded as that of his mother's could somehow be placed in jeopardy. Although these matters are only briefly referred to they were clearly considered relevant for Mr George to have included them in the affidavit. It was also suggested by Mohammad that the relationship with Mr George became a social one as well. 17My attention was also drawn to two affidavits filed by Amir (in 5545 of 2008), one of 20 November 2008 where reference is indeed made to the restaurant investment (paragraph 26) and another affidavit of 22 October 2010 where again reference is made to Mohammad's investment in the restaurant (paragraphs 25 and 26). 18Mr George has filed an affidavit which sets out his recollection of the earlier retainer in 2006. His recollection is unsurprisingly vague. He annexed his fee notes which show on any view of the matter that he spent possibly at least 18 hours and perhaps as many as 30 plus hours either in conference with Mohammad or considering and/or drafting the evidence which Mohammad was to give in those proceedings. That preparation and conferences took place in the first half of that year. He asserted he has next to no recollection of those conferences and had to be reminded of much of the detail of the case from reading Barrett J's judgment of September 2006. 19I was informed by Mr George that he was retained by his current solicitors about 6 months ago.

The Contentions 20It is contended by Mohammad's counsel that Mr George must have come into possession of confidential information concerning Mohammad's family and business dealings, in particular the use of family monies in relation to the restaurant and in particular information concerning the ownership of the property at Marsfield and that therefore there is a real risk that such information could be used unwittingly to his forensic disadvantage. 21Alternatively, it is contended that the inherent jurisdiction should be exercised and Mr George should be restrained because the circumstances would give rise in the opinion of a fair minded reasonably informed member of the public that there is unfairness in him now being permitted to act against Mohammad. 22It is further suggested that the same applies to the firm currently instructing Mr George which of course has had no previous association with the 2006 case. The evidence tendered against that firm, but I presume Mr Doyle in particular, is a letter of 15 June from Mr Doyle which purports to set out Mr George's recollection of the 2006 litigation. It is said that it should be inferred that Mr George has discussed the earlier litigation with Mr Doyle and perhaps as I understand the argument some confidential information has passed. 23Counsel for Parvaneh on the other hand contests that there is real risk of disclosure of any confidential material and as it has not been identified with sufficient particularity there is no way in which the court could form a view that such confidences as might have been shared could be misused. It is further suggested that in the case of the solicitors not only is there an inability but also a failure to nominate any evidence that supports that it and/or Mr Doyle has or is likely to have had access to any of Mohammad's confidential material. The relief is therefore resisted.

A Protection of Confidence 24The principles which are to be applied have been articulated by Brereton J in Kallinicos and Anor v Hunt and Anor after a comprehensive review by His Honour of the authorities. See also Worth Recycling Pty Ltd v Waste Recycling and Processing Pty Ltd (Court of Appeal). 25His Honour with characteristic clarity and rigour distils the salient principles at [76], which I gratefully adopt: "[76] The foregoing authorities establish the following:

During the subsistence of a retainer, where the court's intervention to restrain a solicitor from acting for another is sought by an existing client of the solicitor, the foundation of the court's jurisdiction is the fiduciary obligation of a solicitor, and the inescapable conflict of duty which is inherent in the situation of acting for clients with competing interests ( Prince Jefri Bolkiah ).
Once the retainer is at an end, however, the court's jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure) ( Prince Jefri Bolkiah ).
After termination of the retainer, there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court's intervention such duty having come to an end with the retainer ( Prince Jefri Bolkiah; Belan v. Casey; PhotoCure ASA; British American Tobacco Australia Services Ltd; Asia Pacific Telecommunications Ltd ; contra Spincode Pty Ltd; McVeigh; Sent ).
However, the court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice ( Everingham v Ontario; Black v. Taylor; Grimwade v. Meagher; Newman v. Phillips Fox; Mitchell v. Pattern Holdings; Spincode Pty Ltd; Holborow; Williamson v Nilant; Bowen v. Stott; Law Society v. Holt ). Prince Jefri Bolkiah does not address this jurisdiction at all. Belan v. Casey and British American Tobacco Australia Services Ltd are not to be read as supposing that Prince Jefri Bolkiah excludes it. Asia Pacific Telecommunications Ltd appears to acknowledge its continued existence.
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 ( Everingham v. Ontario Black v Taylor, Grimwade v. Meagher; Holborow; Bowen v. Stott; Asia Pacific Telecommunications Ltd ).
The jurisdiction is to be regarded as exceptional and is to be exercised with caution ( Black v. Taylor; Grimwade v. Meagher; Bowen v. Stott ).
Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause ( Black v. Taylor; Grimwade v. Meagher; Williamson v. Nilant; Bowen v. Stott ).
The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief ( Black v. Taylor; Bowen v. Stott )." 26The two proceedings before the court will both have to focus upon various investments made for and on behalf of the family and the source of monies for them and the profits if any derived from them. The monies rightly or wrongly expended in relation to the restaurant business by Mohammad will have to be examined in Amir's case. That examination seems to me to also be relevant to Parvaneh's case simply because she insists the property in Marsfield, which it seems was used as security for the restaurant investment, is said to be held on constructive trust for her. Amir of course claims an interest in the same property. 27It is accepted that Mr George had numerous conferences with Mohammad totalling many hours in the first half of 2006. It is also perfectly plain that he must have spoken perhaps at some length to Mohammad about his family's financial arrangements, the investment in the restaurant business and the property at Marsfield. It was clear that Mr George thought such material was relevant otherwise as I have said one would not have expected to see it surface as it did in paragraph 26 in Mohammad's statement affirmed in May 2006. Clearly what was disclosed there on one view could reasonably be seen perhaps as the tip of the iceberg. In addition, Mohammad has said in his evidence before me (which was not the subject of challenge) that he did discuss such matters concerning his financial circumstances with Mr George. He also suggests that the professional relationship drifted into a social relationship but I think nothing turns upon that. That was denied by Mr George and I am inclined to accept him. 28Understandably Mr George has little if any recollection of these events and is clearly unable to deny that such conferences as he had involved disclosure of funding arrangements in connection with the restaurant business and other financial details concerning his family and for that matter the property at Marsfield. 29Mr George was cross-examined before me and he gave his evidence candidly and to the best of his ability. His integrity and candour was not and could not be impugned. 30Whilst it is impossible it seems to me to identify the confidences disclosed in relation to these topics with any great precision it is obvious that there were disclosures on the topics identified by Mohammad. Conducting a conference as a practitioner preparing for battle carries with it a need to be acutely aware of a client's strengths and weaknesses and therefore his or her foibles. Making the choice of what to put into evidence but as importantly what to leave out not only requires an assessment of relevance but often an informed decision as to the precise ambit of the evidentiary materials in respect of which it is wise for the client to canvas. As Gillard J remarked in Yunghanns and Others v Elfic and others: "(iii) that as a general rule it is necessary to identify and establish that there was some confidential information provided (see Bricheno v. Thorp (1833) 2 Cr and M 193, 149 ER 725.) But the degree of particularity of the confidential information must depend upon all the circumstances. Often it cannot be identified for fear of disclosure. In considering this factor it must be borne in mind that a solicitor makes notes, forms views and opinions of clients and observes things that the client may have forgotten or overlooked. 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." 31It goes without saying that the client has a right to maintain as confidential information imparted to a lawyer during the course of a retainer. The client can expressly or impliedly consent to the discharge of the obligation of confidence but no such consent has been given in this case. The degree of particularity of the confidential information must depend on all the circumstances. Here the circumstances of the retainer and the nature of the work undertaken for Mohammed in 2006 together with his unchallenged evidence seems to me to provide a proper basis for inferring that information was undoubtedly disclosed in one or more of the many conferences held between him and Mr George and which touched upon financial information which would potentially be relevant to Parvaneh's case and which could be used, and inadvertently so, to Mohammad's forensic disadvantage. 32The impression formed of such person by a lawyer carefully listening and watching him or her in conference whether favourable or otherwise is a valuable forensic insight. A present inability to recall the detail of a conference conducted five years ago does not mean that when the same facts are re-examined memories will not be revived. 33The proceedings brought by Amir, as I have already observed, will necessarily traverse Mohammad's joint venture in the restaurant. It is expressly asserted that his share of monies and resources invested in that restaurant were derived from assets of the trust and rental income from jointly owned properties. It will be asserted as I apprehend it that to do so breached his fiduciary obligations. Amir asserts that Esanda Finance lent money for the restaurant for furniture and to do so took the Marsfield property at least as security for the loan. That evidence will be of considerable interest to Parvaneh's advisers. 34Mr George's inability to recall precisely what if any information passed relating to these topics is no barrier to a grant of relief. In my view in the circumstances there is sufficient material to give rise to real mischief and real prejudice to Mohammad if Mr George is allowed to continue to be retained. Unwitting though it would be there is, I am satisfied, presently in Mr George's subconscious a likely repository of information, impressions, and possibly value judgments formed which could be re-enlivened as he combs over familiar terrain. There is a real risk of that information being used against Mohammad where of course Mr George if he remembers it, would be bound to use it directly or indirectly in Parvaneh's interest. I consider that on that basis he should be restrained as sought. I should note that neither cost nor any other inconvenience or delay has been put forward as a basis for resisting the relief sought. 35So far as the firm of solicitors is concerned I do think different considerations arise. They of course have never previously acted for Mohammad. They along with Mr George however have been retained it seems for at least six months for Parvaneh. There is simply no evidence however that any confidential information that may or may not presently be in Mr George's head has been in any sense communicated to Mr Doyle. In his letter of 15 June he clearly had a conversation with Mr George for the purposes of setting out the information in that letter. Without any intended disrespect to Mr Doyle it simply conveys what Mr George obviously told Mr Doyle but it is entirely superficial in its detail. There is simply no material to suggest that Mr Doyle has any greater level of understanding. The real point is that Mr George himself could not presently tell the court any more about what took place in conferences between him and Mohammad. I do not consider therefore that there could have been any disclosure to Mr Doyle so as to warrant a grant of relief.

The Inherent Jurisdiction 36Although it is unnecessary for me to so decide I would otherwise restrain Mr George pursuant to the inherent jurisdiction of the court. I do consider that a fair minded reasonably informed member of the public would conclude that the proper administration of justice here requires that relief be granted. As part of the Court's obligation to ensure a fair hearing it seems to me that a fair minded person reasonably informed as to Mr George's earlier retainer (in particular the topics clearly dealt with in conference) and the number of conferences he had, would reasonably conclude that there was a real possibility that Mr George appearing now for Parvaneh would be forensically detrimental to Mohammad. Although the jurisdiction should only be exercised in exceptional circumstances and exercised with caution, the public interest in ensuring a fair hearing for all parties before the court persuades me in the circumstances of this case that Mr George should accordingly be restrained. 37For reasons I have previously given however I do not think the same conclusion would be arrived at by the fair minded reasonably informed member of the public in relation to Mr Doyle and/or his firm. There is nothing to suggest that Mr Doyle and/or any member of his firm wittingly or unwittingly have had access to any material which could reasonably be described as potentially detrimental to Mohammad's interests.

Conclusion 38In all the circumstances I propose to make orders in accordance with paragraphs 2 and 3. The motion will be otherwise dismissed. 39As Mohammad has not been completely successful on his motion, I consider the appropriate order for costs is that Parvaneh should pay 75% of Mohammad's costs as agreed or taxed, of the motion.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 July 2011

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