Rodney Morrison v Joy Manufacturing Co Pty Ltd

PROSECUTOR Mr J W Shaw QC SOLICITORS Moray & Agnew

LEGAL REPRESENTATIVES: DEFENDANT Mr S J Rushton SC SOLICITORS Acuiti Legal

JUDGMENT: - 1 - INDUSTRIAL RELATIONS OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Friday 27 December 2002

Matter No IRC 5413 of 2001 RODNEY MORRISON v JOY MANUFACTURING PTY LTD Prosecution pursuant to s 18(2)(a) of the Occupational Health and Safety Act 1983

JUDGMENT ON INTERLOCUTORY APPLICATION 1 These interlocutory proceedings arise out of a prosecution instituted by way of application for an order under s 4(1) of the Supreme Court (Summary Jurisdiction) Act 1967 as applied to this Court by s 168 of the Industrial Relations Act 1996. The prosecutor is Rodney Morrison of the Department of Mineral Resources and the defendant is Joy Manufacturing Co Pty Ltd. The application for order was filed in this Court on 14 August 2001. The solicitor on the record was shown as B Maguire a solicitor whose address for service was that of the prosecutor.

2 The defendant was charged with a breach of s 18(2)(a) of the Occupational Health and Safety Act 1983 (NSW) ("the Act"). It was alleged that the defendant whose registered office was at Vale Road Moss Vale, NSW was "a manufacturer and supplier of plant and equipment used in the operation of underground coal mines (which) did supply on or around September 1995 to Cumnock No 1 Colliery Pty Ltd, plant for use by employees of Cumnock No 1 Colliery Pty Ltd and in contravention of s 18(2)(a) of (the Act) did fail to ensure the machine was safe and without risk to health when properly used."

3 The particulars of the charge included the following: "The defendant at the relevant time was in the business of designing, manufacturing and supplying continuous mining machinery."

4 The particulars of the charge described the piece of machinery in question as having been supplied by the defendant but having been manufactured by a company named as Hydromantic Engineering Pty Ltd.

5 On 4 July 2002 the prosecutor filed a notice of change of solicitor, stating that Norman Correy had been appointed to act as solicitor for the prosecutor. The notice as filed indicated that Mr Correy was of the law firm Moray & Agnew, Solicitors.

6 On 21 October 2002 the defendant filed a motion seeking firstly a declaration that Moray & Agnew had a potential conflict of interest in continuing to represent the prosecutor in the proceedings and secondly an order that those solicitors file a notice of ceasing to act within a specified time. The grounds were firstly that Moray & Agnew had "from at least November 2000 and are presently or have recently acted for the defendant's insurer in relation to workers compensation or public liability claims" and on further grounds said to appear in an affidavit in support sworn by Michael Guihot, solicitor for the defendant.

7 Mr Guihot in an affidavit sworn on 18 October 2002 said that he was a solicitor employed with the law firm Acuiti Legal who were solicitors for the defendant and that he had responsibility for the day-to-day carriage of the matter. He said that he was instructed that Moray & Agnew had acted for the workers compensation and/or public liability insurer of the defendant in connection with claims brought by three named persons. The affidavit named partners of Moray & Agnew who had acted or were still acting for the defendant or its workers compensation or public liability insurers as Steven Harris, Robert McKenna and Robert Crittenden. Mr Guihot alleged in his affidavit that solicitors from Moray & Agnew had conducted an inspection of the defendant's Moss Vale workshop on 28 August 2002 in relation to a claim brought by a named individual.

8 The affidavit annexed correspondence between Acuiti Legal and Moray & Agnew in which that firm was asked to cease acting for the prosecutor.

9 The correspondence from Acuiti Legal alleged that the partners Messrs Harris and McKenna 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 and management, Joy's workplace safety compliance systems." The letter also referred to the inspection of the defendant's workshop on 28 August 2002.

10 The letter also asserted that information obtained by these partners appeared to the defendant to be potentially relevant to issues in these proceedings by reference to allegations made by the Department of Mineral Resources that the defendant should have carried out risk assessments, reviewed its work methods, utilised overseas information to which it had access, "time saving methods workers will discover during routine operations" and "whether there was a real interest in safety among Joy personnel." The letter further pointed to potential relevance in the context of any appropriate penalty which might be imposed if the defendant were found guilty of the charge. The letter said, in part: "Moray & Agnew has confidential information of Joy which could potentially benefit the Department in this prosecution. Moray & Agnew owes Joy an absolute obligation not to disclose that information to other clients. If Moray & Agnew acts with the Department in this prosecution, it undertakes a conflicting duty to advise the Department of all relevant knowledge it possesses. …. Joy maintains that Moray & Agnew has a potential conflict of interest accepting instructions to act on behalf of the department in this prosecution."

11 In reply Moray & Agnew maintained that no information to which it was privy in connection with its handling of the workers compensation and other claims on behalf of insurers was relevant to the prosecution and there was no necessity for the firm to cease acting for the prosecutor. The correspondence from Moray & Agnew showed that the matter was being handled by a partner of that firm Mr Norman Correy.

12 The Defendant relied upon the affidavit of Mr Guihot in support of the notice of motion. The prosecutor, in resisting the notice of motion relied on an affidavit of Mr Correy sworn 28 November 2002. That affidavit said in part: "It has always been accepted on the part of Moray & Agnew that it has acted and continues to act on behalf of insurers of the defendant in the handling of claims, both under the Workers Compensation Act and in respect of public liability matters, which have been brought against the defendant. However, the defendant is not a direct client of Moray & Agnew."

13 Mr Correy then deposed in the affidavit to the fact that Moray & Agnew had had access to certain information concerning the defendant which he summarised by way of a schedule attached to his affidavit. He said that none of the insurance files referred to in the annexure related to the facts and circumstances surrounding the prosecution. Furthermore, Mr Correy deposed that he had "personally reviewed each of the files referred to in the schedule and noted the documents which are referred to generically within the schedule. I am of the view that none of the documents contain any information which is firstly of a confidential nature and secondly, none of the information contained in any of the files is relevant to the issue of the proceedings in respect of which the defendant is being prosecuted ….."

14 The schedule names sixteen files the earliest of which appears to have been opened on 28 June 1999, and the latest of which appears to have been opened on 17 October 2002. Fifteen of the files appear to have been opened prior to the notice of change of solicitor being filed on 4 July 2002.

15 The schedule indicated that the files contained experts' reports, investigation reports, workers' reports of injury, and employers' reports of injury among other documents.

16 In cross-examination Mr Correy said that he had not given a copy of his affidavit to the Department of Mineral Resources nor did he disclose that the fact that the firm Moray & Agnew of which he is a partner held workers compensation and insurance liability files on behalf of the defendant's insurer. He conceded that in some cases employees of Moray & Agnew had obtained statements from employees of the defendant in connection with the files being handled, and that there was a possibility that this would be ongoing. Furthermore Mr Correy conceded that he did not obtain the consent of the defendant to the disclosure of the material contained in the schedule to his affidavit to his client the Department of Mineral Resources.

17 Mr Correy also conceded that in general terms Moray & Agnew could have become aware that the defendant was in the business of designing, manufacturing and supplying continuous mining machinery.

18 At the conclusion of Mr Correy's evidence the defendant sought leave to amend the notice of motion by seeking an additional order namely: "Alternatively an order that the proceedings be permanently stayed or dismissed as an abuse of process." The prosecutor did not object to the notice of motion being amended, subject to being protected by having an adequate opportunity of considering the amendment and responding to it. Accordingly, leave was granted during the course of the interlocutory proceedings to enable the additional order to be sought.

19 The position of the defendant, put simply, was as follows: 1. That in acting for the workers compensation and public liability insurer of the defendant Moray & Agnew owed the same duty of confidentiality to the defendant as it owed to its insurer. 2. That there was both an actual and potential conflict of interest in Moray & Agnew representing the prosecutor in the proceedings. 3. That as Moray & Agnew have already come into possession of information such as would constitute an actual conflict of interest, a maintenance of the substantial prosecution proceedings would constitute an abuse of process of the court and the proceedings should be permanently stayed accordingly.

20 With respect to the first submission referred to above, the defendant relied upon the well-accepted principle exemplified by decisions such as Groom v Crocker (1939) 1 KB 194. The English Court of Appeal was called upon to consider the nature of the relationship between an insured and solicitors appointed by the insurer to conduct the defence of a claim for damages arising out of a motor vehicle accident. The insurance policy gave the insurer absolute conduct and control of all or any proceedings brought against the insured. The solicitors appointed by the insurer admitted that the insured was guilty of negligence in the circumstances of the motor accident and such admission was made without reference to the insured. All members of the Court on appeal held that the solicitors appointed by the insurer owed a duty of care in acting for the insured, notwithstanding their appointment by the insurer. In dealing with the provisions of the contract of insurance Sir Wilfrid Greene MR said: "These provisions do not in terms refer to the position of solicitors, but they clearly entitle the insurers to nominate a solicitor to act in the conduct of the proceedings to which they relate. The duty of the solicitor so nominated to the assured for whom he is to act cannot of course be the same as that which arises in the ordinary case of solicitor and client, where the client is entitled to require the solicitor to act according to his own instruction. The whole object and usefulness of these provisions would be defeated if the assured were to be entitled to interfere with the conduct of the proceedings in that way. The assured in my opinion is not entitled to complain of anything done by the solicitor upon the instructions, express or implied, of the insurers, provided it falls within the class of things which the insurers are, as between themselves and the assured, entitled to do under the terms of the policy when properly construed. A solicitor who, acting on instructions expressed or implied from the insurer, does something to which the insurers, as between themselves and the assured, are not entitled to require the assured to submit, would in my view be acting beyond his competence, and, if what he does is something which in the ordinary way would be a breach of duty to his client, he will be liable to the client accordingly." (at 202/3). Scott LJ said that the solicitors in pleading guilty on behalf of the insured "were acting from first to last in breach of their contractual duty to the respondent. First, they were repudiating the very existence of the relationship of solicitor and client between themselves and the respondent which was constituted by the nomination of the society; secondly, they were acting on orders which the society had no right to give, and taking action with which they knew their client did not agree; and, thirdly, they did not inform him, or consult with him, or give him an opportunity to challenge the right of the society to give the instructions they had given, or, if need be, to intervene and conduct the defence of the case himself at his own expense." (at 224) Mackinnon LJ said: "As the assured is the litigant, the solicitor is his solicitor on the record and owes him the duty of a solicitor to his client." (at 226). His Lordship then went on to discuss circumstances where the solicitor owed a concurrent duty also to the insurer, which discussion is not relevant for current purposes. I understand that whilst the decision in Groom v Crocker no longer represents good law in confining causes of action brought against solicitors to those based on breach of contract, rather than tort, the approach to the duty owed by a solicitor appointed by an insurer to represent an insured is thoroughly entrenched as a contemporary legal principle. Accordingly, Moray & Agnew owed a duty of confidentiality to the defendant whilst representing the defendant in the defence of workers compensation claims and claims for damages, having been so appointed by the defendant's insurers.

21 It is necessary to consider the circumstances in which knowledge gained by Moray & Agnew would be said to be knowledge of the prosecutor. The defendant relied upon the judgment of Hutley JA in the New South Wales Court of Appeal in Ford Excavations Pty Ltd v Do Carmo (1981) 2 NSWLR 253. Whilst the decision of the Court of Appeal was overturned on appeal to the High Court of Australia (Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234) the judgment of the members of the High Court does not impact upon what was said by Hutley JA concerning the question of agency and the extent to which the knowledge of the agent becomes knowledge of the principal, especially in the context of a solicitor/client relationship. Those proceedings were concerned with the provisions of the Limitation Act 1969 (NSW) and involved a consideration of whether material facts of a decisive character relating to the cause of action were or were not within the means or knowledge of an applicant for an extension of time in which to commence proceedings. It was necessary for the Court to consider the relevance of an applicant having taken advice from a legal practitioner as to whether or not there was a cause of action. The applicant in those proceedings had consulted a solicitor to whom he had been referred by his trade union. In discussing the knowledge of the solicitor and the knowledge of the applicant as client Hutley JA said: "The solicitor consulted is the agent of the worker, both to acquire the requisite knowledge to enable the worker to bring a case and to apply such knowledge as he possesses to the task. Where a person employs an agent the knowledge of the agent within the scope of his authority is the knowledge of the principal provided the agent is bound to inform the principal of what he has learned. As Bowstead on Agency, 14th ed (1976), Article 106(2), at p 334, says: 'When any fact … material to any … matter in respect of which an agent is employed, comes to his knowledge in the course of such employment, and is of such a nature that it is his duty to communicate it to his principal, the principal is deemed to have notice thereof as from the time when he would have received such notice if the agent had performed his duty, and taken such steps to communicate the fact … as he ought reasonably to have taken …'. The knowledge of the principal acquired through the agent is not constructive knowledge, it is actual knowledge. The exception to the treatment of the knowledge of the agent as aggregated, with that of the principal, namely, that the honest statements of a principal and of an agent cannot be added together to make a case fraud really proves the rule, actual mala fides being required to establish fraud: Armstrong v Strain [1952] 1 KB 232. Constructive knowledge covers a much wider range of events, eg, it includes knowledge which is not the actual knowledge of any party. Any other rule would have quite strange results. A person who had appointed an agent to investigate a matter would never have knowledge of the facts discovered by the agent if they were not communicated to him. It is not infrequently the case that psychiatrists are only prepared to report on the mental disorder of a patient to the patient's own legal advisers on the basis that the information is not communicated to the patient himself, as his actual knowledge might interfere with his own rehabilitation. A client who had actual knowledge of every material fact, except the identity of the person against whom his cause of action would lie, the discovery of which he left to his solicitor, would be entitled to an extension of time because even though the solicitor discovered that fact, he did nothing to communicate it to him within the statutory period. In both cases, he by hypothesis does not know the fact and has taken reasonable steps to ascertain it. Where a solicitor acting for a client obtains knowledge or has knowledge as part of his general fitness to advise the client of the material facts relating to his client's cause of action, those facts are, in my opinion, part of the actual knowledge of the client. For a trade union solicitor, this includes the state of the art in industrial safety. Whether or not the respondent knew anything about the well-known practices in the industry is, in my opinion, irrelevant. There is no reason here to infer that the solicitor for a trade union, whose members operate in a field in which silicosis is likely to be produced unless proper precautions are taken, does not know of the safety precautions appropriate to that industry from time to time as a necessary concomitant of taking on the responsibility of advising. In other words, there was available to the notional legal adviser a further fact, namely, that the inhalation of dust from which the respondent suffered was at all relevant times preventable by steps which were not inconsistent with the performance the work he was engaged to do. On this basis, a competent legal adviser should have no doubts. (at 266-7)

22 I respectfully adopt the analysis of Hutley JA set out above.

23 In order to establish the second submission, the defendant first contended that a solicitor is required to inform a client of all matters known to the solicitor which is relevant to the client's matter. Some support for this proposition is to be found in the observations of Hutley JA in Ford Excavations extracted above. The defendant also relied on observations of Megarry J (as his Lordship then was) in the Court of Appeal in Spector v Ageda (1973) 1 CH 30. Those proceedings concerned an attempt by a solicitor to recover moneys owing to her pursuant to a loan transaction. The solicitor had altered the loan documentation after it had been executed by the borrowers which had rendered the loan transaction unenforceable. The solicitor who had acted for the borrowers had failed to disclose this information to them. Megarry J in the course of his judgment said: "A solicitor must put at his client's disposal not only his skill but also his knowledge, so far as is relevant; and if he is unwilling to reveal his knowledge to his client, he should not act for him. What he cannot do is to act for the client and at the same time withhold from him any relevant knowledge that he has: see, eg, Moody v Cox (1917) 2 CH 71." (at 48).

24 Thus, it was submitted by the defendant that the knowledge of Moray & Agnew about the material contained in the relevant workers compensation and public liability files is presumed to have been communicated by Mr Correy to the prosecutor and Mr Correy had a duty to communicate it. Actual communication was alleged to have arisen in terms of the affidavit sworn by Mr Correy to which I have previously referred. As Mr Correy was acting for the prosecutor as his solicitor, and as the affidavit filed in these proceedings can only have been filed by Mr Correy in his capacity as solicitor for the prosecutor, it is clear in my opinion that Mr Correy has revealed to the prosecutor the existence of the documents described by him in the schedule to the affidavit. I agree also with the defendant's submission that it is more likely than not that some, if not all, of the documents were privileged. There can be no doubt that the material is intricately related to and identified with the defence by the defendant in these proceedings of claims brought against it by employees under the relevant workers compensation legislation and by others at general law, all of which attracted indemnity or at the least potential indemnity from the defendant's insurers.

25 I also agree with the defendant's submissions that it must be inferred that Mr Correy was instructed by the prosecutor to file his affidavit and to disclose to the Court the material contained within the schedule. I infer that the prosecutor was aware of the representations made by the defendant through its solicitors to Mr Correy that he should cease acting for the prosecutor and that the prosecutor was aware of Mr Correy's response, presumably given on instructions. Accordingly, the prosecutor has, in addition to both actual and imputed knowledge of the descriptions of the contents of the files and the contents themselves of the files, also determined that Mr Correy should continue to represent him in these proceedings.

26 In the context of these submissions it is also necessary to consider whether the existence of the material and the material itself described in the schedule to the affidavit was relevant to any issue in these proceedings. I commence from the obvious position namely that it is for the prosecutor to establish beyond reasonable doubt each and every ingredient of the offence. Accordingly the prosecutor must establish that the defendant designed, manufactured or supplied the machinery which is referred to in the initiating process. Clearly, some of the material contained within the documentation would be relevant to a consideration of the defendant's business activities and operations including whether it designed, manufactured or supplied machinery of certain types. In addition, the defendant's system of work and work processes may become relevant by reference to the establishment of the prosecution case, the rebuttal by the prosecution of any evidence led by the defendant, any reliance sought to be placed by the defendant on a defence available under s 53 of the Act, and if the defendant were found guilty, with respect to any material adduced by way of mitigation. Experience dictates that the systems of work, work practices, and all material relevant to the safety of employees may become relevant in some way or other in connection with the determination of proceedings brought for a breach of the Act. In my opinion such relevance is tangible and possible and cannot be characterised as remote or fanciful.

27 During the course of submissions Mr Shaw QC who appeared for the prosecutor said that the prosecutor might be entitled to obtain any of this information by other means, such as a notice to produce or by way of a summons for the production of documents. I observe that such a notice or such a summons would need to be instituted by Moray & Agnew, addressed to the defendant. These potential circumstances in themselves demonstrate the concern of the defendant. In any event, this submission overlooks the fact that the solicitor/client relationship itself creates an obligation of confidence which is at the heart of the principles by which legal professional privilege is established. It is the act of communication between solicitor and client as much as the nature of what is communicated that is important in this context. In Grant v Downs (1976) 135 CLR 674 Stephen, Mason and Murphy JJ said: "The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain a solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision….". (at 685)

28 I conclude 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. The potential relevance is neither fanciful nor remote. In my opinion it does not matter whether some of the information might otherwise have been obtained by the prosecutor in some other way or may have been available through the public domain. For example, Mr Shaw relied on the fact that Gyles J in the Federal Court of Australia in Automotive Food Metals Engineering Printing & Kindred Use Industries Union v Joy Manufacturing Co Pty Ltd (2000) FCA 693 referred to the operations conducted by the defendant from a number of premises including those named in these proceedings and to the fact that the defendant manufactures and repairs underground mining machinery. What does matter, in my opinion, is that the prosecutor had access to that information from his solicitor which in turn had been obtained direct from the defendant whilst Moray & Agnew had been representing the defendant as its solicitor.

29 In his submissions Mr Shaw referred to a number of decided cases, which I in turn referred to in Romanin (which I shall refer to shortly in these reasons for judgment), emphasising the fact that there must be confidential information which is relevant to these proceedings and that there must be a risk of disclosure which is real, not merely fanciful or theoretical. Mr Shaw submitted that on the authorities there was a requirement that there be proof of actual or threatened misuse of the information. For these propositions he relied in part on the observations of Austin J in the Supreme Court of New South Wales in Oceanic v HIH (1999) NSW SC 292. For my part, I do not read the decision of Austin J as endorsing any particular requirement that there be proof of actual or threatened misuse of confidential information. On the contrary, his Honour emphasised the fact that the solicitor/client relationship itself created the necessary confidence and that the solicitor's duty of confidentiality was absolute in nature. In any event, each case must fall to be decided on its own particular facts and circumstances. Any issue of confidentiality in the context of these proceedings must take into account the fact that they are criminal in nature. Overarching all of this is the concept of disloyalty which is referred to later in these reasons for judgment.

30 With respect to the second submission the defendant relied upon a line of cases which deal with questions of actual and potential conflict of interest involving solicitors acting for a client whose interests are adverse to or potentially adverse to a former client or, indeed, an existing client. I reviewed some of those cases including those of significance in Romanin v University Co-op Bookshop (2001) 107 IRComm 295, commencing at p 300. I shall not repeat what I wrote in that judgment, but will attempt to summarise the principles which in my opinion may be distilled from the authorities referred to therein. These are as follows: 1. Despite submissions to the contrary by Mr Shaw QC, the observations of the Court of Appeal in Rakusen v Ellis , Munday and Clarke JA (1912) 1 CH 831 have in effect been over-ruled by the decision of the House of Lords in Prince Jefri Bolkiah v KPMG (a firm) (1999) 2 AC 222. 2. A court will intervene to prevent a solicitor acting for a client in order to protect the confidentiality of client information provided that the release of the confidential information has not been consented to and provided that the information is or may be relevant to the interests of another client or may be adverse to the interests of a former client. 3. The onus of proof which reposed on the client seeking relief is not a heavy one and may readily be inferred if not obvious. 4. The approach of the courts is motivated by the dual concept of public policy which emphasises the special nature and features of the solicitor/client relationship and by a solicitor's perceived duty of loyalty to existing and former clients. 5. Care should be taken in slavishly applying the approach of the courts in older cases to this area because community values and standards have changed markedly in recent times. I should emphasise that the principles which I have summarised above and for which support is to be found in the cases cited in Romanin have dealt only with the circumstances of these proceedings. In particular, having concluded that Moray & Agnew have disclosed confidential information to the prosecutor, it has not been necessary to consider principles touching upon the risk of disclosure and proof thereof.

31 In terms of the third submission made by the defendant I observe that courts perform an important and integral role in the process of government throughout the community. Courts are thus obliged to ensure the integrity of their processes. Nowhere is this more evident than in the context of criminal proceedings and proceedings of a criminal nature where defendants are exposed to the imposition of sanctions in the name of the state. 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.

32 In these proceedings the prosecutor has permitted and, it seems, encouraged his solicitors to continue to act for him in the full knowledge that those solicitors have come into possession of information which they have gained as solicitors representing the defendant. This information must on any account arguably have some potential and actual relevance to matters which may arise for consideration in these proceedings, as I have previously discussed. There is therefore, in my opinion, tangible evidence of prejudice attaching to the defendant.

33 Prejudice may, equally, be intangible. This was described by Ipp J in the Supreme Court of Western Australian in Mallesons Stephen Jaques v KMPG Peat Marwick (1991) 4 WAR 357 in the following terms: "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." (at 368).

34 In those proceedings Ipp J concluded that the creation of a "Chinese wall" would be insufficient to avoid any conflict of interest or potential conflict of interest, even when coupled with an undertaking given by relevant partners of a law firm to the court. His Honour concluded: "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 matter 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. …." (at 374).

35 The intangible nature of the prejudice was also referred to by Gillard J in the Supreme Court of Victoria in Younghams v Elfic Ltd (unreported 3 July 1998 Matter No. 5970 of 1997). His Honour in discussing the identification and establishment of confidential information said: "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."

36 In my opinion the observations of Ipp J and Gillard J are also pertinent to the consideration of whether in the circumstances of these proceedings the disclosure of the confidential information which I have concluded has occurred will constitute an abuse of process and as to whether or not that abuse of process is capable of being corrected.

37 This Court is a superior court of record constituted by Statute whose jurisdiction is circumscribed by Statute. Within that jurisdiction, the powers that may be exercised are those of a superior court of record. Accordingly, this Court has inherent and implied jurisdiction to control its own processes and to ensure that there is no abuse of those processes.

38 In my opinion, the defendant is justified in complaining that its ability to secure a fair trial has been compromised by the disclosure of the confidential information by Moray & Agnew to the prosecutor, by the refusal of Moray & Agnew to cease to act upon request and by the intangible elements aptly described in the judgments of Ipp J and Gillard J extracted above. I cannot comprehend any means of curing the abuse which has occurred. The information is already with the prosecutor both in fact, in terms of the nature of the documents which have been described and by imputation by reason of the knowledge possessed by partners and employees of Moray & Agnew concerning the contents of the documentation and the other information to which they have had access acting for the defendant pursuant to an appointment having been made by the defendant's insurers.

39 In these circumstances I propose to grant a permanent stay of the proceedings. Costs have not been argued and I propose to reserve costs.

40 I make the following orders: 1. These proceedings are permanently stayed. 2. Costs are reserved. 3. I grant liberty to apply with respect to costs. _______________________

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.