Professions and Trades - Lawyers - Solicitor and client - Duties and liabilities to client - Former client - Conflict of interest - Acting against former client in criminal prosecution - Confidential information - Whether there was any basis for finding a real and sensible possibility of misuse of confidential information.

Prince Jefri Bolkiah v KPMG [1998] UKHL 52; [1999] 2 AC 222, applied.

Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831; Mallesons Stephen Jacques v KPMG Peat Marwick (1990) 4 WAR 357; D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118; Newman v Phillips Fox (1999) 21 WAR 309, referred to.

Applicants: Commonwealth Director of Public Prosecutions

Judgment Number: [2001] TASSC 76

STEPHEN MULLINS and the DIRECTOR OF PUBLIC PROSECUTIONS (COMMONWEALTH) v JUSTIN DAVID ROTHSCHILD

1 The first named applicant in this notice to review is a Federal Police Officer who filed a complaint against the respondent alleging three counts of defrauding the Commonwealth, contrary to the Crimes Act 1914 (Cth), s29D. The second named applicant, pursuant to the Director of Public Prosecutions Act 1983 (Cth) ("the Act"), s9(5), took over the conduct of the proceedings which sought the respondent's commitment for trial on the charges which are indictable. The notice to review was amended to include the second named applicant at the hearing of the notice, without opposition from the respondent. The application was made out of caution as the standing of the first named applicant as a person aggrieved was challenged. The order which is alleged to have aggrieved both applicants was one made by a magistrate in petty sessions to the effect that, save for formal appearances, the persons mentioned on a list attached were not to appear before the magistrate to prosecute the matters. The persons named on the list are every one of the legal practitioners employed at the Hobart office of the second named applicant during the period 4 September 2000 to 23 March 2001.

2 The order was made in these circumstances. The respondent was charged with the offences in May 2000. He had previously faced a charge of arson brought by the Crown in right of the State of Tasmania, had been convicted and had been sentenced to a term of imprisonment. In respect of the State proceedings, he was represented by the Legal Aid Commission of Tasmania and, in particular, by one Ms Harris, a legal practitioner employed by the Commission. When the Commonwealth prosecution commenced, legal aid was again extended to him and Ms Harris was assigned carriage of the matter. Between May and early September 2000, Ms Harris took instructions on several occasions from the respondent who pleaded not guilty in August 2000 to the Commonwealth charges. The case was then adjourned for election, pursuant to the Justices Act 1959, s57A(6). It is common ground that she acquired highly confidential and privileged information from the respondent in respect of the prosecution. On 1 September 2000, Ms Harris' contract of employment with the Legal Aid Commission of Tasmania expired and she returned the file to one of her superiors at the Commission for reallocation to another lawyer with the Commission. She did not copy or remove any of its contents. On 4 September 2000, Ms Harris commenced employment on a temporary basis at the Hobart office of the Commonwealth Director of Public Prosecutions. That same day, according to an unchallenged affidavit sworn by her, and which was before the learned magistrate, she advised the other members of staff at that office, both lawyers and support staff, that she had a conflict of interest in respect of the proceedings against the respondent and could not discuss them whatsoever. In the affidavit sworn on 13 February 2001, she further deposed that she had not disclosed to any person the nature of the instructions given to her by the respondent, or the advice she had given him and, further, that she had not had any communication with the respondent since. She gave an undertaking to maintain the confidentiality of the respondent's instructions.

3 In February 2001, the respondent sought the same kind of order as that appealed against in the Civil Division of the Magistrates' Court and the matter came on for hearing before Magistrate Dixon. He ruled that he did not have jurisdiction to make such an order sitting in the Civil Division of the Court, but when the matter was relisted before him in petty sessions, he indicated that he thought it appropriate to make such an order if the second named applicant did not make arrangements for the prosecution to be undertaken without using any of the legal practitioners employed in the Hobart office as counsel. On 26 March 2001, the Director of Public Prosecutions personally appeared before the learned magistrate and indicated that after serious advice and consideration at the highest level, he was of the view that the proposed order was beyond the learned magistrate's jurisdiction and he declined to give any undertaking to brief outside counsel. The transcript also reveals that by that stage Ms Harris no longer worked in his office. The order appealed against was thereupon made.

4 The proceedings raise three issues: the standing of the applicants as persons aggrieved, the jurisdiction of the magistrate to make the order, and whether, assuming he had jurisdiction, he erred in making the order which he did.

5 As to standing, I think both applicants can validly claim to be persons aggrieved. The first named applicant is the complainant and a party to the lis. Prima facie he has a right to appear by counsel of his choice (Justices Act, s38(1)). The second named applicant, by virtue of the Act, s9(5), is empowered to take over a proceeding that was instituted, or is being carried on by another person, being a proceeding for the commitment of a person for trial in respect of an indictable offence against a law of the Commonwealth. The Act, s15, provides that in proceedings instituted, taken over or carried on by the Director, he may appear in person or may be represented by a member of the staff of his office who is a legal practitioner. The learned magistrate's order effectively denies him this legal entitlement. Both applicants have standing, in my view (see generally McCarthy v Xiong (1993) 2 Tas R 290 at 296 - 297).

6 In view of the opinion I have formed in respect of the third issue, I find it unnecessary to deal with the issue of the learned magistrate's jurisdiction to make the order.

7 It is undoubtedly the case that a superior court of record may make orders restraining certain legal practitioners from appearing for or representing particular parties where confidential material may be disclosed and used against them. The seminal case is that of Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831. At 835, Cozens-Hardy MR stated that, "A solicitor can be restrained as a matter of absolute obligation and as a general principle from disclosing any secrets which are confidentially reposed in him", but rejected the proposition that there is a general principle that a solicitor who has acted in a particular matter, whether before or after litigation has commenced, cannot act for the opposite party under any circumstances. His Lordship went on:

"I do not doubt for a moment that the circumstances may be such that a solicitor ought not to be allowed to put himself in such a position that, human nature being what it is, he cannot clear his mind from the information which he has confidentially obtained from his former client; but in my view we must treat each of these cases, not as a matter of form, not as a matter to be decided on the mere proof of a former acting for a client, but as a matter of substance, before we allow the special jurisdiction over solicitors to be invoked, we must be satisfied that real mischief and real prejudice will in all human probability result if the solicitor is allowed to act."

"As a general rule the Court will not interfere unless there be a case where mischief is rightly anticipated. I do not say that it is necessary to prove that there will be mischief, because that is a thing which you cannot prove, but where there is such a probability of mischief that the Court feels that, in its duty as holding the balance between the high standard of behaviour which it requires of its officers and the practical necessities of life, it ought to interfere and say that a solicitor shall not act."

"The whole basis of the jurisdiction to grant the injunction is that there exists, or, I will add, may exist, or may be reasonably anticipated to exist, a danger of a breach of that which is a duty, an enforceable duty, namely, the duty not to communicate confidential information ...".

8 This so called "narrow" approach has not been followed in recent times. In the Family Court of Australia, Frederico J took the view in In the Marriage of Thevenaz (1986) FLC 91-748 that the court should intervene if there is a risk that confidential communications on relevant matters had been made by a former client, even if the risk may be more theoretical than practical. Bryson J in D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118 at 123, while adhering to the basic Rakusen approach, said:

"It would seem that in deciding the degree of control which it should adopt each court must to some extent interpret its own times and manners and the conduct which it should expect from or even fear from its practitioners. Some ages and some classes of business could well require a more ready apprehension of mischief than the Court of Appeal of England thought appropriate in 1912 or than I think appropriate here and now."

Adverting to In the Marriage of Thevenaz (supra), Bryson J said (also at 123):

"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."

9 It would appear that the Family Court of Australia, because of the sensitivity of the litigation it handles, has adopted a wider approach, not only to minimise the risk of confidential information being disclosed to the opposite party, but to ensure that there be no suggestion of justice not being seen to be done. In McMillan v McMillan [2000] FamCA 1046; (2000) FLC 93-048, the Full Court of the Family Court upheld the granting of an injunction restraining the wife's solicitor from representing her in the circumstances that a clerk in the office of the husband's solicitor, who had had some dealings with the husband, went to work for the wife's solicitor. There was an absence of agreement as to the degree of the clerk's exposure to confidential material and there was evidence from him that he had not discussed the McMillan file with anyone at his new employer's firm, except as it related to the conflict issue. The court declined to follow the Rakusen approach and held that it was sufficient that there be a theoretical risk that the confidential information given by the husband to the clerk might be disclosed, even inadvertently. At par64, the court adverted to "the particular sensitivities" in the family law area, as well as to the need to maintain public confidence in the legal system as justifying an injunction against the wife's firm of solicitors on the basis of their employment of the clerk.

10 Other courts have not gone as far as the Family Court. In Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357, Ipp J issued an injunction on the basis that there was "a real and sensible possibility" of a conflict of duty (at 362). In Farrow Mortgage Services Pty Ltd v Mendall Properties Pty Ltd [1995] VicRp 1; [1995] VR 1, Hayne J held that "injunction should go if there is a real and sensible possibility of the misuse of confidential information" (at 5). In Prince Jefri Bolkiah v KPMG [1998] UKHL 52; [1999] 2 AC 222, Lord Millett, with whom the other Law Lords agreed, said, at 236 - 237:

"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 or theoretical. But it need not be substantial."

This test has been adopted by the Full Court of South Australia in Pradhan v Eastside Day Surgery Pty Ltd & Anor, unreported 18 June 1999, [1999] SASC 256; by Steytler J in Newman v Phillips Fox (1999) 21 WAR 309; by Gillard J in World Medical Manufacturing Corporation v Phillips Ormonde & Fitzpatrick Lawyers & Anor [2000] VSC 196; and by Underwood J in A & B v Disciplinary Tribunal [2001] TASSC 55. I propose to do likewise.

11 It will be noted that apart from the Family Law cases and the case of Mallesons Stephen Jaques v KPMG Peat Marwick (supra), all the other cases to which I have referred have involved possible conflicts of interest in respect of commercial litigation. I am not aware of any case in which the problem has arisen in respect of a criminal prosecution being conducted by a law officer of the Crown. It was submitted that such cases have special sensitivities no less compelling than those referred to in the Family Law area and that there is a special need to ensure that justice be manifestly seen to be done. I see no reason, however, for adopting any different test. It was also submitted that because of the smallness of the office the members of which have been restrained, there is a greater possibility of disclosure than there may be in a large firm capable of erecting "Chinese walls" to secure confidentiality. The learned magistrate said that although he accepted Ms Harris' oath that there had been no actual discussion between her and the other members of the staff of that office, he accepted that there can be inadvertent, unknowing communications between her and members of the Director of Public Prosecutions' staff which could amount to disclosures. With respect, there was no factual material upon which that conclusion could reasonably be reached. In the course of reaching the view which he initially expressed on 23 February 2001 before making the order on 26 March 2001, the learned magistrate referred to and placed particular emphasis upon an observation by Bryson J in D & J Constructions Pty Ltd v Head (supra) at 123, to this effect:

"Wordless communication can take place inadvertently and without explicit expression by attitudes, facial expressions or even by avoiding people one is accustomed to see, even by people who sincerely intend to confirm to control."

However, the context of that remark was a discussion of the possibilities of preventing the disclosure of confidential information relating to a former client of the solicitor's firm, which was acting in adversary proceedings against that client, by securing from those in the firm privy to that information undertakings not to disclose it to those having the conduct of the latter proceedings. In that context, Bryson J said that enforcement by the court would be difficult and that it was not realistic to place reliance on such arrangements in relation to people with opportunities for daily contact over long periods. He added that in view of the existence of a thriving and talented legal profession in Sydney, the court need not fear that the litigant who was deprived of the services of one firm, would not be able to retain adequate representation.

12 In the present case, there is no question of the Office of the Director of Public Prosecutions in Hobart acting against a person who had hitherto been a client of the Office, or of the Office holding any file having its origin in instructions received from a former client. The Office of the Director of Public Prosecutions has never acted for the respondent, and has no file emanating from him. Ms Harris, who has confidential information derived from the respondent, became an employee of the Office between early September 2000 and early March 2001. She revealed the fact of her possession of it, but not the information, to her employer as soon as she commenced employment. She did not thereafter reveal any such information and undertook not to do so. She is a legal practitioner who has taken the oath of honest conduct as a legal practitioner required by the Legal Profession Act 1993 or its predecessor. There is no question of her having brought with her other persons such as clerks or typists who possess any part of her knowledge concerning the respondent. In my opinion, there is no basis from which it could properly be said that there is any real or sensible possibility of the misuse of the confidential information in her possession.

13 The Office of the Director of Public Prosecutions is entrusted by the Act with the conduct of litigation of this kind. Unlike firms of solicitors who may be required to relinquish their retainer, the Office has a statutory obligation to fulfil. Obviously, it would be wrong for Ms Harris to have had the conduct of, or been in anyway involved in, the prosecution of the respondent upon taking up employment with the Office. But that has not been the case and, in my view, the informed bystander could not reasonably feel any loss of confidence in the due administration of the law by virtue of the fact that in her previous employment she had acted for the respondent in respect of a prosecution she was to take no part in.

14 In my view, the learned magistrate was in error in making the order he did and it should be set aside.