Orr v Hunter Quarries Pty Ltd

The confidential information basis

The defendant submitted that the legal firm of McCullough Robertson, presently the solicitors for the prosecutor, had acted at an early stage for the defendant and that in now acting for the prosecutor, there might be a real and sensible possibility that a conflict would arise between its duties to advance the case of the prosecutor and its duty to keep confidential the information given to McCullough Robertson by the defendant, a former client.
It was submitted that if such a conflict arose, it was one which could not be cured by procedural or evidentiary rulings, and that the only appropriate solution would be to grant a permanent stay of the proceedings. As a matter of first impression, if the solicitors for the prosecution have been in possession of confidential information of the defendant relevant to the issues in these proceedings, it is hard to see how any other remedy would be appropriate, except, as submitted by the defendant, for a permanent stay of proceedings to be granted.
The defendant relied upon Malleson Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357. Justice Ipp said at p 368: "In a trial involving serious charges, lasting many months, covering many complex issues, there could be an incalculable and prejudicial effect upon the state of mind, and therefore the demeanour, of a defendant who knows that prosecuting counsel has been briefed by the very firm of solicitors whom he previously consulted to advise him on several of the very issues which form the subject matter of the prosecution. Such prejudice would be intangible, but, nevertheless, very real." (Emphasis added)
Justice Ipp also said at p 374: "It cannot be sufficiently emphasised, in my opinion, that litigation involving the prosecution of serious criminal charges calls for the most careful measures to secure that not only justice is done, but also that it is apparent that it is done. More than in any other kind of litigation, the appearance of justice being done would not survive any general impression that a firm of solicitors could readily change sides to assist in a criminal prosecution, although they previously advised the accused defendant on many of the issues which are the issues which are the subject of the prosecution. In my view the countenancing by the courts of such a volte-face, substantially on the grounds that the partners in possession of the critical information have given undertakings that they will not disclose the information to those assisting the prosecution, will inevitably give rise to such an impression." (Emphasis added)
The defendant referred me to the decision of Justice Marks in Rodney Morrison v Joy Manufacturing Co Pty Ltd [2002] NSWIRComm 366. Justice Marks referred to the decision of Justice Ipp in Malleson. His Honour said at [31]: "If the processes of the court are called into doubt their credibility is diminished with obvious results. Each and every defendant is entitled to have proceedings brought against him, her or it conducted in a manner which accords in all respects with the laws of natural justice and which utilises processes which are fair and beyond reproach. This compulsion extends not only to the courts themselves but also to the participants including prosecutors."
The case concerned a prosecution for a breach of the Occupational Health and Safety Act 1983 (NSW). It arose out of the operations of a colliery, for which the defendant had supplied continuous mining machinery.
The legal firm Moray & Agnew had for some years acted for the defendant's insurer in relation to workers compensation and public liability claims. There was evidence that two partners of Moray & Agnew had knowledge and information concerning the defendant's business and systems including "the profile and qualifications of Joy's past and present employees, Joy's work practices, Joy's work systems, Joy's accident/incident reporting systems, Joy's past workplace accidents, Joy's systems of supervision of management, Joy's workplace safety compliance systems". Solicitors from Moray & Agnew had conducted an inspection of the defendant's workshop in relation to one of the insurance claims.
The defendant asserted in correspondence that Moray & Agnew had confidential information regarding Joy which could potentially benefit the prosecution. Moray & Agnew responded in correspondence to the effect that it had no information to which it was privy in connection with its handling of the insurance claims on behalf of insurers, which was relevant to the prosecution.
Before Justice Marks, the defendant submitted that in acting for the workers compensation and public liability insurers of the defendant, Moray & Agnew owed the same duty of confidentiality to the defendant as it owed to its insurer. Further, the defendant submitted that Moray & Agnew had already come into possession of information such as would constitute an actual conflict of interest, and the maintenance of prosecution proceedings would constitute an abuse of process of the court and should be permanently stayed accordingly.
Justice Marks made the factual finding that "the information obtained by Moray & Agnew whilst representing the defendant in connection with the defence of workers compensation and public liability claims has both actual and potential relevance to these proceedings" - at [28]. His Honour held that because such information was held by Moray & Agnew, there was tangible evidence of prejudice attaching to the defendant, through Moray & Agnew now acting for the prosecutor - at [32].
Justice Marks referred to the decision of Justice Ipp summarised above and also referred to the unreported decision of Justice Gillard in Younghams v Elfic Limited (unreported, 3 July 1998, matter no. 5970 of 1997). Justice Gillard discussed the identification and establishment of confidential information, saying: "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 clients 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 information that should not be disclosed or used against the client." (Emphasis added)
The factual background to the defendant's submission in relation to conflict of duty is contained in the affidavits read by both defendant and prosecutor. In the prosecutor's outline of submissions a comprehensive summary of that material was provided. The summary was as follows: "15. McCullough Robertson were retained by the Defendant when Mr Jeremy Kennedy, a former partner in the Newcastle office of McCullough Robertson, was engaged between 11 September 2014 and 17 September 2014 (JK Matter). A file was created (JK File). These proceedings had not been commenced. 16. No substantive work was done after the termination of the retainer on 17 September 2014. The JK file was transferred to the Defendant's new lawyers, McDonald Johnson Lawyers in April 2015 (after the Defendant had paid its outstanding fees), with the effect that the Defendant has been in possession of the file since that time. 17. A copy of the JK file was retained by McCullough Robertson and archived. An electronic copy was also created and stored (Electronic File). 18 The Prosecutor retained Henry Davis York Lawyers (HDY) in relation to these proceedings. Ms Scarlet Reid was a partner at HDY and had the care and carriage of the matter. 19. Ms Reid retired as a partner of HDY and joined McCullough Robertson as a partner on 16 October 2017. At that time, Ms Reid did a conflict check which revealed the presence of the JK Matter. Ms Reid made immediate arrangements for the Electronic File to be locked down. That occurred on the same day with the result that Ms Reid could not access the file. The hard copy of the JK file had been archived since 15 June 2015. Ms Reid had not seen any documents pertaining to the JK Matter. Ms Reid had never met or spoken to Jeremy Kennedy. 20. On 10 November 2017, Mr Hilton Grugeon, a Director of the Defendant, sent a letter to McCullough Robertson requesting that McCullough Robertson cease to act because of the firm's prior legal representation of Hunter Quarries in the JK Matter. 21. On 16 November 2017, McCullough Robertson responded by letter advising that: '..effective information barriers have been established to ensure that Ms Reid will not, at any time, be able to gain access to any information which is confidential to Hunter Quarries Pty Ltd'. 22. The letter was accompanied by an Affidavit sworn by Ms Reid on 16 November 2017 attesting to the manner in which she became aware of the JK Matter and the nature and extent of the information barrier that had been put into place. In that Affidavit, Ms Reid also confirmed that no current employee of McCullough Robertson had ever worked on the JK Matter and that she had not, and had never been, in the possession of any information which is confidential to the Defendant. 23 The Defendant did not object to that course of action and took no steps to enforce its prior objection. Instead, the Defendant continued to defend these proceedings on the basis that McCullough Robertson continued to act for the Prosecutor. 24. The hearing commenced on 16 April 2018. 25. On 22 May 2018 Mr Neil Canavan, the Operations Manager of the Defendant at the time of the Incident, gave evidence to the effect that the Defendant had certain Safe Work Method Statements in place as at the date of the offence. Those documents were not in the possession of the Prosecutor. They had not been provided by the Defendant pursuant to various notices under s. 155 or s 171, nor in answer to a Subpoena issued on the Defendant in February 2018. Accordingly, the hearing was adjourned and on 25 May 2018, the Prosecutor filed a Notice of Motion, seeking leave to issue a further Subpoena on the Defendant in relation to the documents to which Mr Canavan referred. 26. On 7 June 2018, the Defendant alleged that McCullough Robertson was in a position of conflict of interest. Critically, the basis for the allegation was stated to be as follows: 'As you are aware, the basis of your application is for the production of certain documents which were previously the subject of compulsory production notices, served by the Prosecutor. …. Whilst not waiving privilege to any documents that may have been collected or viewed by representatives of your firm, by the provision of this tax invoice or by reference to those documents, we observe that you are now in a position where your firm may have been involved with, or even contributed to an alleged material failure to produce documents.' (emphasis added) 27. On 7 June 2018, Cameron Dean, a partner at McCullough Robertson, swore an affidavit in which he stated that from his perusal of the Electronic File, he was able to ascertain that the last substantive work performed by McCullough Robertson for Hunter Quarries in respect of the incident that is the subject of these proceedings was on 16 September 2014. 28. The reason that date is important is because as at 16 September 2014, only one s.171 Notice had been issued and it sought only the names and addresses of the Defendant's employees at the date of the Incident. There was no other statutory notice in place seeking any documents of the kind referred to by Mr Canavan. Indeed, the next notice issued under s. 171 was not until 26 September 2014, when the Defendant was represented by McDonald Johnson. 29. On 12 June 2018, the Defendant caused to be issued a Subpoena on Cameron Dean seeking, amongst other things, a copy of the Electronic File. 30. On 22 June 2018, McCullough Robertson wrote to the Defendant in relation to a regime for the service of the Defendant's confidential evidence in support of the foreshadowed application for a stay. This was because it was anticipated that the Defendant would serve confidential evidence in relation to McCullough Robertson's alleged conflict arising from the firm's involvement with or contribution to "an alleged material failure to produce documents". 31. By letter dated 2 July 2018, the Defendant confirmed that it had been in possession of the hard copy file of the JK Matter since April 2015 and did not require a further copy of the Electronic File. 32 The evidence of Cameron Dean in this interlocutory application: 32.1 confirms the lockdown of the Electronic File on 16 October 2017 and that this meant that Scarlet Reid and her team members, Nathan Roberts and Tom Reaburn, who had also come to McCullough Robertson from HDY, were prevented from being able to access the Electronic File. In addition, other lawyers and staff who had formerly been at HDY were also locked out of access to the electronic file; 32.2. states that from 16 February 2018, the Electronic File was further secured so that only three members of McCullough Robertson's Knowledge and Legal Excellence team had access to it, and access could only be granted through a request to those people; 32.3 states that Mr Dean has not worked substantively on these proceedings in any way. He has never any had any conversation with Jeremy Kennedy or any other employee who worked on the JK Matter about that matter; 32.4 states that he inspected the Electronic File solely for the purposes of preparing his 7 June 2018 Affidavit and that the only information he obtained when he inspected the Electronic File on 7 June 2018 was the information contained in paragraphs 4 to 6 of his 7 June 2018 Affidavit; 32.5 states that he is not aware of any other information contained on the Electronic File; 32.6 states that Mr Dean has not discussed or otherwise conveyed any information whatsoever about the contents of the Electronic File with anyone, other than as set out in his Affidavits sworn 7 June 2018 and 18 September 2018. 33. The evidence of Ms Reid, Mr Munstermann and every other solicitor and law clerk who has worked on these proceedings, is that: 33.1 they were aware of the JK Matter and had been informed of the lockdown of the Electronic File; 33.2 they have never accessed or reviewed the Electronic File or the physical copy of the file and they have no knowledge of the content of that file; and 33.3 they have never spoken to Jeremy Kennedy or any other employee who worked on the JK Matter about that matter. 34. The Defendant has filed no evidence as to the content of any confidential information contained in the Electronic File."
I gratefully adopt that summary as the factual background to the determination of the matter. In addition to the material in the affidavits, there was some short cross-examination of Mr Dean by senior counsel for the defendant.
In cross-examination Mr Dean said that on 16 October 2017 he first accessed the file. He went to a folder of correspondence in the file and looked at it only to ascertain the names of all of the people in the firm who had worked on the file when McCullough Robertson acted for the defendant for a short period. He did so to make sure that all of those people would be locked out of the file.
There was a later complete lockdown of the file. In February 2018 everybody in the firm was locked out of it. Mr Dean only looked at the file on 7 June 2018 because Mr Dickson asked him to do so to ascertain three matters. He made a diary note of those three matters which were: 1. Ascertaining the date of the last work done; 2. Ascertaining the date the file was transferred to another firm; and 3. Ascertaining the date the file was closed - which was during June 2015, nine months after it was transferred.
He also looked at the billings on the file. In this regard it is to be noted that the invoice for work done was in evidence, and was at all times in the possession of the defendant. That invoice contained much detail about the work done by McCullough Robertson when it acted for the defendant.
Senior counsel for the defendant made it plain that he was not suggesting that Mr Dean had looked at anything else in the file. He acknowledged that while the file was only partly locked down (meaning that only the people who had worked on the file for the defendant were locked out) it was theoretically possible that anyone else in the firm could have accessed the electronic file.
That evidence raised the possibility that someone else in the firm could have looked at the electronic file before it was completely locked down. I find that this possibility was theoretical rather than real. The evidence discloses that no-one in McCullough Robertson who has been involved with the prosecution has ever looked at the file. Mr Dean, who is unassociated with the prosecution, only looked at the file for a very limited purpose, concerned with ascertaining some dates. There was no reason for anyone else to look at the file and no evidence that anyone did. Further, there was no evidence that anyone in the prosecution team at McCullough Robertson had ascertained, by any means, any of the information in that file.
The prosecutor submitted that the English case of Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 set out the relevant test in relation to continuing duties to preserve the confidentiality of information imparted during the solicitor-client relationship. This case was referred to by Justice Marks in Morrison, a case relied upon by the defendant. In Bolkiah, Lord Millett said at [235]: "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. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. I do not think that it is necessary to introduce any presumptions, rebuttable or otherwise, in relation to these two matters. But given the basis on which the jurisdiction is exercised, there is no cause to impute or attribute the knowledge of one partner to his fellow partners. Whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case." (Emphasis added)
Bolkiah is a civil case. Further, it is a case involving an application to restrain a solicitor from continuing to act, rather than an application for a permanent stay of criminal proceedings. However, the passage emphasised in the quotation above accords with the approach taken by Justice Ipp in Malleson, followed by Justice Marks in Morrison, where Justice Ipp referred to solicitors acting on the record against a former client, where those solicitors had previously advised the client "on several of the very issues which form the subject matter of the prosecution".
When it is recalled that the High court in Jago said that the power to permanently stay a criminal prosecution should only be used in the most exceptional circumstances, it seems to me a relevant matter to consider, whether the solicitors now acting for the prosecution, had previously acted for the defendant "on several of the very issues which form the subject matter of the prosecution", to again recite the phrase used by Justice Ipp.
It is convenient to break that question up into two time periods. The first requires the court to look at the information and knowledge regarding the defendant which was or would have been obtained by McCullough Robertson in the period when that firm did act for the defendant, shortly after the death which led to the prosecution. The second time period concerns the entire time after McCullough Robertson ceased to act after that initial short period and sent their tax invoice. This longer period includes consideration of the actions of Mr Dean and the possibility of any other staff members of McCullough Robertson accessing the file or the electronic file.
In relation to the first short period, I accept the submission of the prosecutor that there is no evidence that there was anything confidential in the electronic file retained by McCullough Robertson. The defendant has been in possession of the McCullough Robertson hard copy file since April 2015 and it has a copy of the electronic file. There was no evidence, and no submission, that there was anything confidential in that file. Nor was there any submission that any knowledge or information obtained by McCullough Robertson in the initial short period was or could be used by the prosecutor to the detriment of the defendant.
It was the notion that McCullough Robertson may have contributed to a failure to produce documents (assuming that there was such a failure) that led to the motion seeking a permanent stay being filed by the defendant. The basis for a permanent stay expanded to Mr Dean's access to the file, and other (shifting sands) matters dealt with above. On the hearing of the motion the defendant did not pursue an earlier suggestion which it made that McCullough Robertson may have been involved in, or in some way contributed to, a failure to produce documents.
There is no evidence that there has been any knowledge acquired by those at McCullough Robertson who have worked on the prosecution team, of any confidential information of the defendant. Mr Kennedy, the Newcastle partner of McCullough Robertson who acted for the defendant for the brief initial period, retired from the firm in October 2015, two years before Ms Reid joined the firm. No-one at McCullough Robertson has ever discussed the matter with Mr Kennedy. Thus there is no evidence of any access to any confidential information obtained by Mr Kennedy, if indeed there was any such information.
It is deserting reality to ignore the fact that entirely different lawyers have been running the prosecution, to those McCullough Robertson lawyers initially involved in acting for the defendant. I am satisfied on the evidence that nothing in the original file has come to the notice of any lawyer at McCullough Robertson who has advised or appeared for the prosecutor.
I find that there has been no actual prejudice caused to the defendant by the fact that different lawyers in the firm of McCullough Robertson acted for the defendant for a short time many years ago. I also find that there is no evidence of intangible prejudice, as that expression was used by Justice Marks in Morrison and Justice Gillard in Younghams. As was said in the later case, it all depends on the circumstances. There is no evidence that anything learned by Mr Kennedy in doing work for the defendant could rebound to the detriment of the defendant. The case is to be distinguished from Morrison, where the firm of solicitors, by acting on a number of workers compensation and public liability insurance claims, obtained effectively inside knowledge of the workings of the defendant, or to use the phrase of Justice Gillard, obtained information which he called the "getting to know you" factors.
I find that there is no basis upon which to make an order for the permanent stay of these proceedings.

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Judgment (11 paragraphs)

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Cases Cited (15)