Romanin v University Co-operative Bookshop Ltd

Industrial Relations Commission (NSW)|2000-05-18|Before: Marks J

Industrial Relations Commission of New South Wales in Court Session

CITATION : Romanin v University Co-operative Bookshop Ltd [2001] NSWIRComm 171 APPLICANT PARTIES : Franco Romanin RESPONDENT University Co-operative Bookshop Ltd FILE NUMBER: IRC 2567 of 2000 CORAM: Marks J CATCHWORDS : s106 proceedings - Application by respondent that applicant's solicitor cease to act - Solicitor's conflict of interest and solicitor's "disloyalty" - Application granted. LEGISLATION CITED : Industrial Relations Act 1996 s 106 World Medical Manufacturing Corporation v Phillips Ormond & Fitzpatrick Lawyers & Anor (2000) VSC 196 (18 May 2000) Rakusen v Ellis, Munday and Clarke (1912) 1 Ch 831 Orince Jefri Bolkiah v KPMG (a firm) (1999) 2 AC 222, 1999 1 All ER 517 In the Mariage of L P and K D McMillan (2000) FamCA 1046 (6 Sept 2000) Oceanic v HIH (1999) NSW SC 292 (1 April 1999) CASES CITED : Colonial Portfolio Services Ltd v Nissen (unrep. 7 Nov 1000 50083/2000) Wan v McDonald (1991) 33 FCR 491 McVeigh & Anor v Linen House Pty Ltd and Rugs Galore Australia Pty Ltd (1999) VSCA 138 (3 Sept 1999) Westend Entertainment Centre Pty Ltd v Equity Trustees Ltd (1999) VSC 514 (10 Dec 1999) D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118 Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112, 42 FCR 307 Southblack Water Coal Ltd v McCullough Robertson (1997) QSC 77 (8 May 1997) HEARING DATES: 12/07/2000; 01/20/2001; 05/25/2001 DATE OF JUDGMENT: 08/02/2001

APPLICANT Mr I M Neil of counsel SOLICITORS Snelgrove & Partners

LEGAL REPRESENTATIVES: RESPONDENT Ms K M Dulhunty of counsel SOLICITORS Harmers Workplace Lawyers

JUDGMENT: - 1 - INDUSTRIAL RELATIONS OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J 2 August 2001 Matter No IRC 2567 of 2000 FRANCO ROMANIN v UNIVERSITY CO-OPERATIVE BOOKSHOP LTD Application under s106 of the Industrial Relations Act 1996

1 The applicant Franco Romanin has sought certain relief against the respondent University Co-operative Bookshop Ltd under s 106 of the Industrial Relations Act 1996 ("the Act"). The proceedings arise out of an alleged employment relationship between the applicant and the respondent pursuant to which the applicant was appointed the Chief Executive Officer of the respondent. The applicant alleges that he had a conversation with Richard Howard the Chairman of the respondent's Board of Directors on or about 18 July 1999 pursuant to which the applicant was encouraged to apply for the position of General Manager and Chief Executive Officer of the respondent. The applicant further alleges that on 10 August 1999 the Board of Directors resolved to offer him that position, and that that position was ratified on the following day. Shortly thereafter the applicant alleges that his employment was confirmed in writing, and he then commenced to perform his duties. The summons alleges that on 14 October 1999 the Board of Directors of the respondent purported to resolve to withdraw what it described as an offer of appointment that had not yet been accepted. It is alleged in the summons that the conduct of the respondent was unfair and the applicant seeks relief under s 106 accordingly.

3 A reply filed on behalf of the respondent on 22 May 2001 alleged in part that any business transacted by the Board of Directors on 10 August 1999 was invalid. The reply denies ratification of any resolution and denied that the applicant was appointed to any position with the respondent. It is alleged that the applicant was at all relevant times a temporary appointee whose services were obtained from Drake Personnel. In addition the reply alleged that the applicant was at all relevant times "a qualified solicitor" and acted as company secretary of the respondent. It is asserted that he was "always aware that the actions and business of (the) Board after 27 March 1999 up to September 1999 were potentially invalid and were subject to legal challenge from some directors." The reply referred to opinions obtained from Malcolm Broun QC and John McCarthy QC confirming that the actions and business of the Board (were) invalid.

4 Relevantly, the reply makes the following allegations: The applicant, acting as company secretary, appointed John Snelgrove to provide legal advice on a commercial transaction and to advise the respondent's Board on seeking the appointment of an administrator, (as stated in para 7(a) of the applicant's affidavit dated 29 January 2001) due to the complications referred to in para 30. The applicant failed to disclose to the Board that Snelgrove was also his personal solicitor. The applicant, acting as company secretary, with a duty of preparing Board minutes, did not incorporate in the minutes any declaration regarding this relationship with Snelgrove. The applicant did not distribute to directors any declaration that Snelgrove was also his personal solicitor. As stated in para 7(k) of his affidavit dated 29 January 2001, the applicant also informed Snelgrove of the voting patterns of the Board and which directors were supportive of the applicant.

The investigation required the registrar to have access to the respondent's minutes of Board meetings, business conducted by the respondent and all documentation which detailed the actions of directors and the manner in which the Board's business was being conducted.

As John Snelgrove was acting for the respondent in relation to seeking the appointment of an administrator from the registrar, he also had access to all of this information and was aware of what business of the respondent was invalid and of the actions and conduct of various directors and the basis for the respondent seeking the appointment of an administrator.

After the offer of employment was withdrawn and whilst the applicant was suspended from his month-to-month appointment, John Snelgrove commenced acting for the applicant in these proceedings.

5 The respondent filed a Notice of Motion on 17 November 2000 which sought a number of orders. Relevantly for the purpose of this judgment the following orders were sought: An order that Snelgrove & Partners be restrained from acting or continuing to act as solicitors for Frank Romanin, in his action pursuant to section 106 of the Industrial Relations Act against University Co-operative Bookshop Limited. In the alternative, a declaration that Snelgrove & Partners should forthwith cease to act for Frank Romanin in his action against University Co-operative Bookshop Limited pursuant to section 106 of the Industrial Relations Act 1996.

6 The grounds and reasons are succinctly stated in the Notice of Motion for the purposes of these proceedings:

In or around September 1999, Snelgrove & Partners were retained to act as solicitors for the University Co-operative Bookshop Limited. 2. The retainer was made by Frank Romanin, then acting General Manager of University Co-operative Bookshop Limited. It appears that the retainer was intended to be a general retainer to act for the University Co-operative Bookshop. 3. Pursuant to that retainer, at least two sets of instructions were given to Snelgrove & Partners. 4. One set of instructions related to the possible purchase of a business by the University Co-operative Bookshop. The file in that matter reveals that: (a) instructions were given on 8 September 1999; (b) various material was left with Snelgrove & Partners between 8 and 10 October 1999; (c) a conference took place on 14 October 1999, as did perusal as what is described as "file of materials"; (d) there is a file note for 14 October 1999 which states inter alia "prepare sale - purchase documents. Dismissed current position". (e) on 15 October 1999, Snelgrove & Partners prepared a memorandum of fees including for work on 14 October 1999,which is the conference at which the dismissal of Frank Romanin appears to have been raised; and (f) on 19 October 1999, by facsimile, Snelgrove & Partners sent to the University Co-operative Bookshop a letter stating, inter alia, "for the same reasons as set out in our fax to you relating to the Registrar of Co-operatives, we can no longer act for the Co-operative. We were retained by Mr Romanin on your behalf".

A second set of instructions was given to Snelgrove & Partners around the same time. These instructions related to an inquiry being conducted by the Registrar of Co-operatives and also related to the provision of general advice to the University Co-operative Bookshop Limited. The file reveals that: - (a) material was sent to Snelgrove & Partners from the University Co-operative Bookshop on a number of occasions. Material appears to have been sent on 22 September, 27 September, 29 September and 5 October 1999; (b) that material included material relating to internal board decisions, including disagreements which had occurred within the board, background material on directors (including current directors) and details on investigations into the University Co-operative Bookshop Limited activities being carried out by the Registrar of Co-operatives; (c) on 14 October 1999 Snelgrove & Partners took what appeared to have been two telephone calls from Frank Romanin. The note of one telephone call reveals that Snelgrove & Partners were made aware of changes within the board. The note appears to record: "two sides have come together 3. directors resign other people being appointed FR - minority camp Chairman - do deal - protected Supreme Court action on foot - pending" (d) on 15 October 1999 Snelgrove & Partners prepared a memorandum of fees; and (e) on 19 October 1999 Snelgrove & Partners sent a facsimile to the University Co-operative Bookshop. That facsimile stated: " We were retained by Mr Romanin on your behalf. We note in the circumstances of Mr Romanin's suspension from his employment last Friday and our acting for him in relation to that matter, it is inappropriate in our view to continue to act for the Co-operative. We further note that some of the work that we did was circulated to board members by Mr Romanin".

In the circumstances, the University Co-operative Bookshop Limited believes that there is a significant conflict of interest in Snelgrove & Partners, solicitors for the University Co-operative Bookshop at the time of critical events in the current matter, continuing to act for Frank Romanin. 7. In addition, the appropriateness and lawfulness of the decision by Frank Romanin to cease to use solicitors traditionally retained by the University Co-operative Bookshop Limited and to instead retain Snelgrove & Partners will be likely to be an issue between the parties in the section 106 application by Frank Romanin. In the circumstances, it is inappropriate that Snelgrove & Partners continue to act in a matter where there is a potential for direct involvement in the litigation. 8. On 18 October 2000 the solicitors for the respondent (applicant in this Notice of Motion) wrote to Snelgrove & Partners pointing out both the conflict of interest and the potential for them to be directly involved in the litigation. A copy of that letter is attached marked "A". 9. On 24 October 2000, Snelgrove & Partners wrote to the solicitors for the respondent, indicating, inter alia, that "we do not share your views on the matter". A copy of that letter is attached marked "B". 7 The correspondence referred to in paras 8 and 9 of the Grounds extracted above does not add to the general allegations contained in the previous paragraphs of those grounds.

8 Mr Snelgrove filed an affidavit in the proceedings and gave oral evidence. His evidence was to the effect that he did not have at any time a general retainer to act for the respondent and acted only with respect to specific matters. The only instructions received from the respondent were those given to him by the applicant personally. Only one of the matters in which Mr Snelgrove was retained by the applicant to act for the respondent could, in my opinion, conceivably have any bearing with respect to the subject matter of the substantive proceedings between the applicant and the respondent. On about 16 September 1999 the applicant purporting to act in his role as Chief Executive Officer of the respondent gave instructions to Mr Snelgrove to give advice with respect to the ability of the Board of Directors of the respondent to request the Registrar of Co-operatives to appoint an administrator. In the course of being instructed in respect to that particular matter and advising eventually on the form of a letter which should be forwarded to the Registrar of Co-operatives Mr Snelgrove saw and became aware of material which suggested that there was disharmony amongst the members of the Board of Directors and that proceedings had been commenced in the Supreme Court of New South Wales seeking certain orders in connection with the valid appointment of directors. Other legal practitioners had apparently been retained in connection with the Supreme Court proceedings, and it does not appear as though Mr Snelgrove was given copies of any documentation concerning those proceedings nor given any information about the basis at law for the commencement of those proceedings.

9 By letter dated 29 September 1999 the Manager, Legal of the Registry of Co-operatives forwarded to the applicant at his home address a Report of Inspectors dated 4 August 1999 arising out of issues raised by four of the directors of the respondent in May 1999. The letter of the Manager, Legal stated that that report was to be given to a person who had been appointed an inspector under the Co-operatives Act to conduct an inquiry into the working and financial condition of the respondent. The letter invited submissions in relation to the report or any other relevant matter. The report of these Inspectors dated 4 August 1999 commented inter alia upon the conduct of two opposing groups within the Board of Directors. There was comment also on the manner in which meetings of the Board had been conducted and generally as to the activities of the Board.

10 Mr Snelgrove settled the terms of a letter from the respondent to the Registrar of Co-operatives with respect to the proposed appointment of an Inspector and gave written advice about it.

11 On 14 October 1999 the Board of the respondent resolved to suspend the applicant on full pay and prohibited him from entering the office premises of the respondent. At that stage the applicant advised Mr Snelgrove that he would not be in a position to furnish him with any further instructions.

12 The applicant attested and Mr Snelgrove confirmed that the Inspector's Report of 4 August 1999 had been received by him in his personal capacity of an officer of the respondent and that he had given it to Mr Snelgrove in connection with these proceedings and not in connection with any matter upon which Mr Snelgrove had been retained to act on behalf of the respondent.

13 As I have previously related, conflict arose between the applicant and the respondent following the resolution of the Directors of the respondent on 14 October 1999, to which I have earlier referred. The applicant approached Mr Snelgrove for advice with respect to this matter. Mr Snelgrove wrote to the Acting Company Secretary of the respondent by letter dated 19 October 1999 indicating that he acted for the applicant in connection with the resolution of 14 October 1999. That letter in part said that the applicant "does not believe that the purported meeting of Directors was properly convened. If it should pass that the meeting was not properly convened then any business transacted thereat is a nullity and of no effect." There then followed discussion of factual matters concerning the relationship between the applicant and the respondent and certain matters impacting upon that relationship.

14 The letter concluded by enclosing inter alia Bills of Costs and Disbursements in relation to the two matters upon which Mr Snelgrove had received instructions "from Mr Romanin on behalf of the Cooperative" stating that Mr Snelgrove no longer believed that he could act for the respondent.

15 By letter dated 22 October 1999 solicitors then acting for the respondent responded to Mr Snelgrove's letter stating in part that as Mr Snelgrove had acted for the respondent he had a conflict of interest and should not accept instructions to act against it on behalf of the applicant. As is obvious, Mr Snelgrove did not accede to the request.

16 No question was raised by the applicant as to the jurisdiction of this Court to deal with the relief sought by the respondent in the Notice of Motion and the power to make the order or declaration sought. This Court is a superior Court of Record with limited jurisdiction, that jurisdiction being circumscribed by the provisions of the Industrial Relations Act 1996. It is without question that this Court has inherent jurisdiction or power (without having to discuss the controversy as to whether what is involved is jurisdiction or power) to take such action as is necessary in support of its own processes. This extends, obviously, to any potential abuse of process.

17 The basis upon which superior Courts of Record will resolve matters of controversy of the kind being considered in these interlocutory proceedings was discussed by Gillard J in the Supreme Court of Victoria in World Medical Manufacturing Corporation v Phillips Ormond & Fitzpatrick Lawyers & Anor (2000) VSC 196 (18 May 2000). In those proceedings his Honour discussed the jurisdiction of the Court to restrain a solicitor. After reviewing relevant authorities his Honour concluded: This Court clearly has jurisdiction to restrain a person from disclosing confidential information in appropriate circumstances. The jurisdiction does not depend upon the fact that the person sought to be restrained is a solicitor and an officer of the court or that he be an agent who is not an officer of the court. …. The jurisdiction is based upon the equitable obligation to keep a confidence. (at para 71,2).

18 I respectfully adopt and apply the approach taken by his Honour in those proceedings.

19 There have been many decided cases dealing with the ability of legal practitioners to accept instructions from a client in circumstances where it is alleged that this involves some form of conflict of interest in connection with another client (either an existing or a former client) or arising out of allegations that confidential or privileged information made available by a client would be communicated in circumstances which would breach that confidence or that privilege. These cases cover a multitude of factual circumstances including legal practitioners acting for more than one party to a transaction, and different legal practitioners within the one firm carrying out their duties within a quarantined area created by an information barrier known as a "Chinese wall". Many of the cases discuss difficulties created by a decision of the English Court of Appeal in Rakusen v Ellis, Munday and Clarke (1912) 1 Ch 831. Rakusen was said to be authority for a proposition which, as expressed in the headnote was: "that there was no general rule that a solicitor who had acted for some person either before or after the litigation began could in no case act for the opposite side; the Court must be satisfied in each case that mischief would result from his so acting …." The decision in that case generated over a long period of time much debate. It is not necessary that I consider that decision because it was over-ruled by the decision of the House of Lords in Prince Jefri Bolkiah v KPMG (a firm) (1999) 2 AC 222; 1999 1 All ER 517.

20 The House of Lords established that the Court of Appeal had been incorrect in Rakusen. The principal speech was that delivered by Lord Millett. His Lordship distinguished two scenarios. In circumstances where a court was asked to intervene where a fiduciary (including a legal practitioner) was acting at the same time both for and against the same client, such intervention would be based "on the inescapable conflict of interest which is inherent in a situation." In the case of action taken where a fiduciary was sought to be restrained from acting for a current client by a former client, the basis for intervention was the protection of the confidentiality of client information. In these circumstances "the fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence." It followed from what his Lordship had said that a former client of a fiduciary who sought to restrain that former fiduciary from acting in a matter for another client had to establish two matters; "(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."

21 His Lordship then discussed the burden of proof which was on the person claiming relief. He said "….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. …. 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."

22 In discussing the duty of a solicitor to preserve confidentiality, his Lordship said that that duty was "unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. Moreover, it is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for his benefit. The former client cannot be protected completely from accidental or inadvertent disclosure. But he is entitled to prevent his former solicitor from exposing him to any avoidable risk; and this includes the increased use of the information to his prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information is or may be relevant."

23 In determining the degree of risk of disclosure his Lordship stated 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. …."

24 In dealing in general terms with the necessary degree of risk, his Lordship made comment about policy considerations which were endemic when considering information which was both confidential and privileged. His Lordship said: "It is of over-riding importance for the proper administration of justice that a client should be able to have complete confidence that what he tells his lawyer will remain secret. This is a matter of perception as well as substance. It is of the highest importance to the administration of justice that a solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put that information at risk of coming into the hands of someone with an adverse interest."

25 I have previously referred to the controversy which resulted from the approach initially adopted by the English Court of Appeal in Rakusen. Most of the Australian authorities were critical of that approach. I instance the judgment of the Full Court of the Family Court of Australia in In the Marriage of L P and K D McMillan (2000) FamCA 1046 (Finn, Kay and Moore JJ 6 September 2000.) I refer also in this regard to the incisive analysis of the relevant authorities by Austin J in the Supreme Court of New South Wales in Oceanic v HIH (1999) NSW SC 292 (1 April 1999).

26 The decision of the House of Lords in Prince Jefri has been followed by a number of decisions in Australia. Some of these are discussed in the recent judgment of Rolfe J in the Supreme Court of New South Wales in Colonial Portfolio Services Ltd v Nissen (unrep. 7 Nov 2000 50083/2000).

27 Ms Dulhunty of counsel who appeared for the respondent in support of the Notice of Motion submitted that in addition to applying strictly the test contained within the House of Lords decision in Prince Jefri I should also have regard to a number of observations within decisions in Australia that there were wider, policy considerations of the kind articulated by Lord Millett as the basis for the establishment of the principles and which should, per se, be taken into account in determining these proceedings. This approach was resisted by Mr I Neil of counsel who appeared for the applicant to resist the application. In his submissions Mr Neil commenced from a basis of a fundamental principle, namely prima facie a litigant should have the right to select the legal practitioner of his or her choice when embarking upon litigation. Mr Neil submitted that the test in Prince Jefri had not been satisfied because firstly no confidential information of the requisite kind had come into Mr Snelgrove's possession as a consequence of his retainer and secondly the only person who had communicated any information to Mr Snelgrove had been the applicant personally. Because the applicant was the only source of information given to Mr Snelgrove none of that information was confidential from the applicant because the applicant obviously knew of it. If Mr Snelgrove were restrained from acting for the applicant, the applicant would be able to instruct a new solicitor and convey to him the same information which had been given to Mr Snelgrove. Finally, it was submitted by Mr Neil that none of the allegedly confidential information could be relevant to any issue in the proceedings.

28 There can be no doubt that there were policy considerations expressed by Lord Millett in the course of determining the outcome of the proceedings in Prince Jefri. However, on one view of it those observations were made as a means of justifying the conclusion and in the course of arriving at that conclusion but do not necessarily represent the substantive principle for which that decision is authority.

29 A number of judges in Australia have emphasised the question of public policy. For example in Wan v McDonald (1991) 33 FCR 491 Burchett J in the Federal Court of Australia in discussing the duty of a solicitor to safeguard confidential information of a client said: "But there are at least two other aspects of the problem to which attention has more recently been drawn; a solicitor's duty of loyalty, which cannot be treated as extinguished by the mere termination of the period of his retainer, and the important consideration of public policy which gives a special quality to the relationship of solicitor and client that the law will not generally permit to be stained by the appearance of disloyalty." (at 513). In the Supreme Court of Victoria Court of Appeal in McVeigh & Anor v Linen House Pty Ltd and Rugs Galore Australia Pty Ltd (1999) VSCA 138 (3 September 1999) Batt JA (in whose judgment Callaway JA agreed) said: "The authorities establish that a court will restrain a solicitor from acting for a litigant not only in order to prevent disclosure of confidences of a client or former client, but also to ensure that the solicitor's duty of loyalty to the former client is respected, notwithstanding termination of the retainer, and to uphold as a matter of public policy the special relationship of solicitor and client." (at par 23). His Honour cited with approval the passage of Burchett J in Wan v McDonald which I have previously extracted.

30 In Westend Entertainment Centre Pty Ltd v Equity Trustees Ltd (1999) VSC 514 (10 December 1999) Mandie J in the Supreme Court of Victoria referred to a solicitor's duty of loyalty and the need to avoid the appearance of disloyalty. His Honour cited McVeigh in support. His Honour concluded that "for the reason of appearance of disloyalty the injunction sought would have been granted against a firm of solicitors had they not removed themselves from the record."

32 In D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118 Bryson J in the Supreme Court of New South Wales commented: "Cautious conduct by the Court is appropriate because the spectacle or the appearance that a lawyer can readily change sides is very subversive of the appearance that justice is being done. The appearance which matters is the appearance presented to a reasonable observer who knows and is prepared to understand the facts. The Court should weigh the facts and assess the risks in the eye of reality, theoretical risks should be disregarded ...." (at 123).

33 This matter was covered comprehensively by Drummond J in the Federal Court of Australia in Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112, 42 FCR 307. His Honour had discussed the tests adopted by the English Court of Appeal in Rakusen which, obviously, had not at that stage been over-ruled by the House of Lords in Prince Jefri. Drummond J concluded that the test in Rakusen was not appropriate to modern conditions. His Honour noted that in earlier decisions there had been emphasis on "the special fiduciary position" of a solicitor. There were important reasons why this emphasis should be taken into account in determining whether a solicitor was entitled to act against the interests of a former client. Drummond J identified a public element, namely the role of a solicitor as an officer of the court and the integral part played in the administration of justice. His Honour also identified the policy considerations which applied to the existence of legal professional privilege. His Honour concluded: "It would be inconsistent for the law to encourage the client to repose confidential information in a solicitor by making those confidences privileged from disclosure without the client's consent, if the law on the other hand, were to readily allow the solicitor to act for a new client in a matter adverse to the interests of the old client, ie, to act in circumstances in which a perception that confidences might not be kept could easily arise. ….In recognition of the special position of the solicitor as a fiduciary and of the importance now placed on the need for the appearance of integrity on the part of solicitors, as repositories of confidences, in the role they play in the administration of justice, I think that the stringent approach to whether a solicitor will be free to act adverse to the interests of a former client that has been taken in recent cases is preferable to the more lenient approach that was generally, but by no means invariably, adopted in past times. In my opinion, a solicitor is liable to be restrained from acting for a new client against a former client if a reasonable observer, aware of the relevant facts, would think that there was a real, as opposed to a theoretical possibility that confidential information given to the solicitor by the former client might be used by the solicitor to advance the interests of a new client to the detriment of the old client." (at FCR 312).

34 In Southblack Water Coal Ltd v McCullough Robertson (1997) QSC 77 (8 May 1997) Muir J in the Supreme Court of Queensland, after citing relevant authority, took into account not only the obligation of a solicitor as a fiduciary but also "public policy considerations which afford special protection to solicitor client communications and which require the maintenance of public confidence in the administration of justice."

35 Having regard to the above principles it is now necessary to apply them to the factual circumstances which pertain to these proceedings. There can be no doubt that Mr Snelgrove was furnished with information to the effect that there was some doubt about the valid appointment of directors of the respondent and the validity of their conduct. He was also furnished with information concerning divisions between directors. That information was given to him by the applicant acting in his capacity as Chief Executive Officer of the respondent, whether the applicant held that position in fact or ostensibly. That information was conveyed to Mr Snelgrove by the applicant on behalf of the respondent so that it was, in effect, given to him by the respondent. It matters not, in my opinion, that Mr Snelgrove was subsequently given the same information by the applicant in some personal capacity when he was given the Report of Inspectors or that the applicant could have conveyed the same information to Mr Snelgrove by way of instructions after his employment with the respondent had come to an end. The reasons why I am prepared to disregard either the real or potential disclosure of the same information outside the employment situation is based on the policy considerations to which I have earlier referred. I shall return to this aspect shortly.

36 Accordingly, I find that Mr Snelgrove is in possession of information which is confidential to the respondent as disclosed to him by the applicant purporting to act as Chief Executive Officer of the respondent. It is obvious that the respondent has not consented to the disclosure of that information to the applicant otherwise than as associated with the applicant's former employment with the respondent.

37 It is next necessary to consider whether that information is or may be relevant to the interests of the respondent in these proceedings or may be adverse to the respondent's interest. It is obvious that the validity of the appointment of directors who purported to confer the position of Chief Executive Officer of the respondent on the applicant is a matter which will be relevant to these proceedings, as will be the validity of their conduct. In addition the respondent has raised for consideration the appropriateness and lawfulness of the decision of the applicant to appoint Mr Snelgrove to perform work for the respondent in circumstances where he was alleged to be the applicant's personal solicitor. In this latter regard there is no evidence about the nature of the work which Mr Snelgrove performed for the applicant and as to whether or not he was in the course of performing such work concurrently with the work which he performed for the respondent. It seems to me that it is more likely than not that this latter assertion goes not to the disclosure of confidential information but more likely to the policy element to which I have previously referred.

38 These proceedings present difficulties which I do not apprehend to have been encountered in other reported proceedings, or at least those to which counsel have helpfully referred me in the course of written and oral submissions. On the one hand I have concluded that confidential information was made available to Mr Snelgrove by the applicant in his capacity as purporting to act as Chief executive Officer of the respondent and that that information is or may be relevant to these proceedings in a manner which may be adverse to the interests of the respondent. On the other hand the only person who confided that information to Mr Snelgrove was the applicant himself who, as Mr Neil submitted, is able to disclose that information to Mr Snelgrove at any stage of the proceedings. In the same way, Mr Snelgrove has in all probability been exposed to the same information in greater detail when Mr Snelgrove received the Inspector's Report which I am satisfied had been received initially by the applicant in his personal capacity and given to Mr Snelgrove in that capacity. Yet again, at the time that the applicant gave that report to Mr Snelgrove, he was in the course of acting for the respondent and the information contained in the Inspector's Report conceivably had some relevance to the matters upon which Mr Snelgrove was engaged in providing advice, albeit of a limited kind, to the respondent.

39 I should add that I am conscious also of the fundamental principle that persons within the community should be able to select the legal practitioner who will represent them in proceedings, as free as possible from all fetters.

40 Whilst there is obviously some degree of balance involved in determining the outcome of these proceedings, the matters which are in my opinion persuasive of the final result are the policy considerations to which I have earlier referred at some length. The articulation of these policy considerations by a number of single judges at superior court level and by the Victorian Court of Appeal are, in my opinion, highly persuasive that in Australia public policy considerations of the kind that have been described are a significant factor in impacting upon the approach to be taken in considering cases of this kind. To that extent it seems to me that these public policy considerations should either form a separate element or, at the least, be utilised as a gloss on the fundamental principles which seem to be now established by the House of Lords' decision in Prince Jefri.

41 These policy considerations dictate, in my opinion, that a more cautious rather than a less cautious manner should be adopted in the protection of former clients against the disclosure of confidential information with potential for adverse consequences gained by a solicitor in the course of acting for that client.

42 In B & J Constructions Pty Ltd, previously referred to, Bryson J, in discussing the degree of control which a court should exercise in dealing with matters of this kind 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 now." (at 123). I would readily adopt with respect these comments of Bryson J. In Rakusen the Court of Appeal declined to interfere where a partner of a solicitor was appointed to act for a defendant in circumstances where the other partner of that solicitor had previously acted for a plaintiff. The members of the Court of Appeal, sitting in 1912 emphasised the high standard that the Court and the community expected of solicitors. For example there was reference to solicitors in the judgment of Cozens-Hardy MR as "solicitors of the highest honour and integrity" who "may frequently be perfectly able to act in the same matter for a new client, and at the same time may be perfectly able to avoid disclosing secrets without putting any strain upon their memory, conscience, or integrity."

43 My own perception is that legal practitioners are not generally held in the same esteem in the year 2001 and are certainly not said to be capable of acting in the same manner. There have been profound changes in community expectations over a wide range of conduct, even in recent times. I instance the marked change in attitude towards taxation avoidance (as opposed to evasion) which has occurred within the last 20 years. I also instance the changes to perceptions of corporate behaviour which may have existed in the 1980's but certainly does not exist in the year 2001. There is, in my opinion, a much greater community preference for transparency and accountability and a much higher expectation of the manner in which a whole range of fiduciaries will carry out their responsibilities including, currently, directors of corporations. To the extent to which I am able to reflect contemporary community values it would be my expectation that a former client of a solicitor would expect that his or her solicitor would refrain from accepting instructions in a matter which was potentially adverse to the former client's interests and where there was some possibility that information had been obtained by the solicitor from the client which could be used to assist the new client. This raises the spectre of "disloyalty", to which adequate reference has been made in the authorities to which I have previously referred.

44 In all the circumstances it was, in my opinion, inappropriate for Mr Snelgrove to accept instructions from the applicant to represent him in these proceedings. Although I readily concede that there were arguments available to Mr Snelgrove to resist the respondent's application, on balance the policy considerations to which I have referred which I trust reflect contemporary community values (and in turn, attitudes) held at the beginning of the 21st Century must result in the respondent succeeding on this Notice of Motion. The respondent's allegations that Mr Snelgrove's actions raise concerns of "disloyalty" as a former solicitor are upheld.

45 Accordingly I order that John Anthony Snelgrove be restrained from acting or continuing to act as solicitor for the applicant Franco Romanin in these proceedings.

46 Costs are reserved. I grant liberty to apply with respect to costs.

47 The proceedings will be listed for further directions once the identity of the applicant's new representation is known. __________________

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