The partners in the firm of Dobinson Davey Clifford Simpson be restrained from continuing to act for the plaintiff.
[2]
This is an application by the defendant for an order that the solicitors for the plaintiff be restrained from continuing to act for her. The plaintiff's solicitors commenced the action by Originating Application accompanied by a Statement of Claim in October 2007. The plaintiff seeks relief under the Domestic Relationships Act 1994 and under the Court's equitable jurisdiction. Her claim is that the parties lived together in a domestic relationship for the purposes of the Act from May 2002 until November 2006. The defendant has been represented throughout the proceedings by the firm of Farrar Gesini and Dunn.
The basis of the application for an order restraining the plaintiff's solicitors, Dobinson Davey Clifford Simpson, from continuing to represent the plaintiff is that two solicitors who were formerly with Farrar Gesini and Dunn (whom I shall call "Farrars") left that firm and are now employed by the plaintiff's solicitors (whom I shall call "Dobinsons").
Ms Alison Osmand was an employed solicitor from 1999 and a salaried partner from 2002 with Farrars, which was a partnership until 30 June 2006. Since then the practice has been conducted by a company. Ms Osmand continued with the practice as an employed solicitor from that date until 30 May 2008. She commenced employment with Dobinsons on 23 June 2008.
Another solicitor, Mr Paul Glass, was also employed by Farrars. He left and took up employment with Dobinsons during July 2008.
Ms Osmand had the conduct of the matter on behalf of the defendant from about November 2006 until she left Farrars. As well as attending to the present action on the defendant's behalf, she also had the conduct on his behalf of a proceeding in the Federal Magistrates Court in which the parties were each seeking orders in relation to the daughter of the relationship. The defendant says that he confided generally in Ms Osmand and relied on her advice and recommendations.
Mr Glass was not directly involved in the matter at Farrars but he arranged and chaired weekly meetings of the solicitors at Farrars where they discussed their matters. The defendant's file was one of those discussed.
The plaintiff has sworn an affidavit in which she says that she will suffer hardship if she has to change solicitors. She changed solicitors once before, in the course of the proceedings in the Federal Magistrates Court, and found the experience expensive and stressful. She has confidence in Mr Phillip Davey, the partner at Dobinsons who has the conduct of her matter. She wants Mr Davey to continue to act for her. He has carried out a large amount of work for her already and has a detailed knowledge of her matter. He has told her that the firm is charging fees to her at a lower rate than his usual hourly rate. She regards this as a significant financial advantage which she would lose if she had to change solicitors. She says that she has made inquiries of other solicitors, who have quoted her much higher hourly rates.
Apparently inconsistently with the plaintiff's evidence in this regard, in early September 2008 she instructed Ms Lyndon of McGuinness Eley, solicitors, to represent her in relation to the dispute with the defendant relating to the children. This happened after the filing of the affidavits in support of the present application. No further affidavit evidence was put on by the plaintiff to explain why she instructed those solicitors. It seems inconsistent with the reasons advanced in paragraph eight of her affidavit of 25 July 2008 as to why she did not wish Dobinsons to be restrained from acting for her. It can hardly be said that the issues relating to the children are entirely different or separate from the issues in the present proceedings. One would expect that both matters would involve confidential and personal information. One would expect some overlapping of the evidence in the two sets of proceedings. It is submitted on behalf of the defendant that I should draw an inference that the plaintiff's evidence about why she instructed another firm of solicitors in relation to the dispute concerning the children would not have assisted her on the present application. In the absence of any submission to the contrary I draw the available inference.
One of the other partners at Dobinsons, Ms Dianne Simpson, has sworn an affidavit in which she describes herself as the firm's compliance officer with respect to its "information barrier protocols" for the present matter. She says that the protocols were adopted and implemented by the firm in August 2007, based on guidelines prepared by the Law Society of New South Wales in consultation with the Law Institute of Victoria. Until Ms Osmand and Mr Glass started work with the firm, there had not been a need for the practical application of the protocols.
Ms Simpson annexed a copy of Dobinsons' information barrier protocols document to her affidavit. A copy is Annexure A to these reasons. Pursuant to the protocols, Mr Davey and certain other partners and staff at Dobinsons have signed declarations to the effect that they have not received confidential information about the matter from Ms Osmand or from Mr Glass, and undertakings that they will not seek such information. Ms Osmand and Mr Glass, on commencing employment with Dobinsons, signed declarations that they had not provided confidential information about the matter to "any member of the firm Dobinson Davey Clifford Simpson", and undertakings that they would not do so. The plaintiff signed a document headed "Limitation of Retainer" in the following terms:
[3]
1. Acknowledge receipt of your advice, including your letter 4 June 2008, in relation to conflicts of interest and your firm's Information Barrier Protocols; and
[4]
2. Hereby irrevocably limit your retainer so as to release you from any obligation to seek or utilise confidential information which may be held by Alison Osmand relating to my matter.
[5]
She signed a document in relevantly identical terms in relation to Mr Glass.
[6]
Ms Simpson states in her affidavit that during June 2008, all staff at Dobinsons received training in relation to the protocols and the practical steps related to them. In addition, Dobinsons had taken steps including prominent marking of relevant files, installation of separate printers in the offices of screened persons, separate storage of relevant files, installation of soundproofing in solicitors' offices, and specific training for mail staff to ensure that confidential documents were not distributed to screened persons. Alterations were made to the firm's computer system to restrict access by screened persons to documents in matters governed by the protocols.
[7]
I was provided in evidence with a copy of a document entitled "Information Barrier Guidelines" adopted by the Council of the Law Institute of Victoria on 20 April 2006. The document states that the guidelines were prepared by the Law Society of New South Wales in consultation with the Law Institute of Victoria. Their expressed aim is to assist law practices to guard against the risk of a breach of the duty of confidentiality owed to former clients. Such an information barrier, in the opinion of the Society and the Institute, can permit a law practice to act against a former client without breaching its duty to preserve the confidences of that client.
[8]
The introduction to the guidelines includes the following passage:
[9]
An information barrier is of itself no solution to a situation where there is a conflict of interest between one client and another client (or in some cases, former client) of the law practice. An information barrier does not remove the duty of undivided loyalty which a law practice owes to a client. In such situations, a law practice may only act with the fully informed consent of both clients
[10]
A copy of the information barrier guidelines adopted by the Law Institute is annexed to these reasons at Annexure B.
[11]
Although the protocols established by Dobinsons are stated to have been prepared in accordance with the Law Institute guidelines, it will be seen that they are not in identical terms. Notably, the Law Institute guidelines employ the expression "earlier matter" which they define to mean the retainer in which the confidential information was obtained, access to which the client in the current matter is not entitled. By contrast, the Dobinsons protocols use the term "the conflict matter" which they define generally in the same terms.
[12]
The effect of this difference, as I read the two documents, is that the Law Institute guidelines do not contemplate that the "earlier matter" in which the "screened person" obtained the confidential information will be the same matter as the "current matter". By contrast, the Dobinsons protocols have been prepared in such a way that they are capable of applying to such a matter: as indeed they have been applied by Dobinsons to the present matter.
[13]
I was informed during the course of submissions by counsel that the Law Institute guidelines have been adopted by the Law Society of the Australian Capital Territory as well as the Law Society of New South Wales, and may be taken to be in use by members of those bodies (that is, solicitors and firms of solicitors) in the three jurisdictions. The guidelines in evidence are published accompanied by common questions and answers and by commentary and examples. In answer to question 2.2 in the Common Questions section of the document, the following statement appears:
[14]
These guidelines deal with the use of information barriers where a law practice acts for a current client against a former client for whom the law practice acted in an earlier matter. They do not address the use of information barriers in concurrent matters.
[15]
Again at question 2.9, it is repeated that the guidelines are not intended to apply to concurrent retainers.
[16]
I adopt a helpful analysis of the case law by Brereton J in Kallinicos v Hunt[2005] NSWSC 1181. His Honour noted the general acceptance of the jurisdiction of a court to restrain a solicitor, at the suit of a former client, from acting contrary to the interests of that client based upon obligations of confidence. His Honour demonstrated the way in which the courts distinguish between "existing client" cases and "former client" cases. The distinction had been made in Prince Jefri Bolkiah v KPMG[1998] UKHL 52; [1999] 2 AC 222. In an "existing client" matter, issues arose as to conflict of interest and breach of fiduciary obligation of loyalty in addition to the preservation of confidentiality of information imparted during the solicitor-client relationship. It was held in Prince Jefri Bolkiah that in a "former client" matter, it was necessary to show that the solicitor was in possession of confidential information, that the former client had not consented to the disclosure of that information, and that the information might be relevant to the new matter in which the interests of the solicitor's new client might be adverse to those of the former client. In an "existing client" case, on the other hand, the disqualification of the solicitor had nothing to do with the confidentiality of client information, but was based on the inescapable conflict of duty inherent in acting both for and against the same person.
Brereton J listed and summarised the effect of a number of cases which established the inherent jurisdiction of a court to restrain a solicitor from acting in a particular case as part of its supervisory jurisdiction. The authorities are listed in his Honour's judgment in Kallinicos at paras 37 to 47 and I shall not repeat them.
His Honour went on to list at paras 50 to 75 a number of more recent authorities relevant to the principle. Again, I shall not list them again. At para 76, Brereton J summarised the principles as follows:
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.
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).
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.
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.
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.
The jurisdiction is to be regarded as exceptional and is to be exercised with caution.
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.
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.
His Honour referred, in relation to each of those aspects of the principles, to supporting authority. I respectfully adopt his Honour's analysis and expression of the applicable principles.
In this Court, Higgins CJ refused an application for a restraining order in Wagdy Hanna & Associates Pty Ltd v National Library of Australia[2004] ACTSC 75; (2004) 185 FLR 367, a case where a solicitor who had had the carriage of prior Federal Court litigation between the same parties on behalf of the plaintiff had left one firm to become a partner in another. The new firm had not been involved in the Federal Court matter but had subsequently, by coincidence, received instructions from the defendant in the Supreme Court action. There was a connection between the two matters: the defendant had pleaded that the settlement of the Federal Court proceeding barred the plaintiff from bringing the Supreme Court action.
Higgins CJ, after reviewing the principles, held that there was no credible risk of confidential information being revealed to the defendant or to its solicitors. His Honour regarded it as relevant that, although the parties were the same, the instructions related to two separate proceedings in different courts, and that the solicitor who had moved firms had not been involved in the Supreme Court action and had given undertakings not to discuss the matter with others in the firm.
I was referred by counsel to authorities arising under the Family Law Act 1975, which could be argued to be more relevant to the present application. In In the Marriage of Thevenaz[1986] FamCA 44; (1986) 84 FLR 10, Frederico J faced a situation where the wife was represented by a firm of solicitors who had previously acted for both husband and wife on the acquisition of the matrimonial home not long before the separation of the parties. It appears that his Honour was not taken to authority in the detail which appears in the judgment of Brereton J in Kallinicos. His Honour noted that it was asserted and not contradicted that the material in the conveyancing file included confidences exchanged in the course of the firm acting for both parties in the conveyancing matters which were capable of embarrassing the husband. His Honour said at page 13 that it was of the utmost importance that justice should not only be done but should appear to be done. There was a risk, which might well be merely theoretical but still existed, that justice might not appear to be done. In the circumstances his Honour would, if necessary, have made an order restraining the solicitor from continuing to act for the wife in the matrimonial proceedings.
In D & J Constructions Pty Ltd v Head(1987) 9 NSWLR 118, Bryson J said at 122:
[17]
Where confidential information has been communicated by a client to a solicitor and is relevant to litigation in which that client is now engaged and is still available to the solicitor, the court should take a cautious approach to any proposal that it should allow the solicitor to act against that client: the considerations are much the same whether the information was communicated in the course of the litigation itself or in earlier business and whether or not the solicitor is a sole practitioner or is one of a number of partners or was employed by a principal. 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 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 would be extremely difficult and it is not realistic to place reliance upon 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. . . there is a thriving, diverse and talented legal profession and the court need not fear that a litigant who is deprived of the services of one firm will not be able to retain adequate representation.
[18]
His Honour referred to the decision of Frederico J in Thevenaz, and said:
[19]
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 of facts and circumstances can conceivably be relevant; the sensitivity which even the most reasonable people feel about such litigation when they are engaged in it calls for careful measures to secure not only that justice is done but also that it is apparent that it is done, an appearance which would not survive any general impression that lawyers can readily change sides.
[20]
I was referred by counsel to two decisions actually involving the firms involved in the present application.
In Carberry v Delaney[2008] FamCA 460, Faulks DCJ dismissed an application by a husband, by then unrepresented, seeking an injunction to restrain Dobinsons from continuing to represent his wife, in circumstances where Farrars had acted for him at a time when Ms Osmand had been a partner with Farrars. She had subsequently moved to Dobinsons. Ms Osmand had had nothing to do with the matter when she was at Farrars.
It appears that his Honour was referred to little authority relevant to the application, and that the decision was effectively ex tempore (heard on 18 June 2008, reasons delivered on 20 June 2008). His Honour was informed that Dobinsons had applied their information barrier protocols, which, his Honour was informed, accorded with "recommendations made by the Law Institute of Victoria and adopted and recommended by the Law Society of New South Wales". It does not appear that his Honour was informed of the significant difference between the guidelines propounded by the Law Institute and the Law Society, and the protocols put in place by Dobinsons.
His Honour said at para 34:
[21]
It may be possible in some cases to reach easy and clear conclusions. If, for example, a solicitor who had previously directly personally represented the husband were to seek to join the firm representing the wife, it would be hard to imagine that there could be any basis upon which any reasonable observer would conclude that this could be satisfactory whatever arrangements were put in place, and the apprehension of the husband in such circumstances would have to be regarded as reasonable. This is so even if the duty of that lawyer to the wife had been excluded as is proposed that Ms Osmand's duty will be excluded.
[22]
That, of course, is precisely the situation in the present matter. Ms Osmand was the solicitor with the carriage of the matter when she was at Farrars. It is clear to me that if that had been the case, Faulks DCJ would have had no hesitation in making the restraining order.
I was also taken to Lakey v Lakey[2008] FMCAfam 827, a decision of Brewster FM in the Federal Magistrates Court of Australia. The solicitors and counsel in that matter were the same as those before me. Brewster FM ordered that Dobinsons be restrained from continuing to act for the husband and that Farrars be restrained from continuing to act for the wife. The basis of the order restraining Dobinsons from continuing to act was that Ms Osmand had moved from Farrars to Dobinsons, although she had not had the carriage of the matter on behalf of the wife at her earlier firm. Brewster FM followed a decision of the Family Court of Australia in McMillan v McMillan[2000] FamCA 1046; (2000) FLC 93-048 reluctantly, regarding himself as bound by a decision he did not agree with.
[23]
I am satisfied that if it were not for the information barrier protocols, the outcome of this application would be beyond doubt. Dobinsons, having employed Ms Osmand, a solicitor who had had the carriage of the matter on behalf of the husband at Farrars, could not continue to represent the wife. The question is whether the protocols can make any difference to this.
I have come to the conclusion that they cannot. It might be different if the protocols had been adopted by Dobinsons in precisely the terms endorsed by the Law Society of New South Wales and the Law Institute of Victoria, but that is not the case. The guidelines as endorsed by the professional bodies are clearly designed to apply to "former client" cases. None of the professional bodies has suggested that the guidelines can have any application to an "existing client" case. The present case is an "existing client" case. Regardless of the "Chinese walls" or "information barriers" put in place, it is not in the public interest to permit a firm which has chosen to employ the solicitor who had the carriage of a matter on behalf of an opposing party in a current matter to continue to represent the other party.
It might be argued that there could be an exception to this general principle where to enforce it would result in unacceptable hardship to the respondent. That is not the case here. I have mentioned earlier (para 8) that the plaintiff has instructed other solicitors in relation to her dispute with the defendant in relation to their child.
A submission was made by senior counsel for the plaintiff respondent that the Court should have regard to the desirability of encouraging or at least permitting reasonable mobility of solicitors between firms. It is enough for me to say that I am not satisfied that this is capable of being a factor which might militate against the protection of the interests of the client, which is the basis of the principles which have been developed in this area.
For these reasons the applicant defendant is entitled to the relief he seeks. Dobinsons should be restrained from continuing to represent the plaintiff in the action.
I shall hear the parties as to costs.
[24]
I certify that the preceding thirty eight (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.
[25]
Solicitors for the plaintiff: Dobinson Davey Clifford Simpson
[26]
Solicitors for the defendant: Farrar Gesini and Dunn