Técnicas Reunidas SA v Andrew

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

1. BATHURST CJ: I have had the advantage of reading the judgment of Leeming JA in draft. I agree with the orders proposed by his Honour and his Honour's reasons.
2. LEEMING JA: This expedited application for leave, heard concurrently as if an appeal, is brought by Técnicas Reunidas SA against the partners of the law firm Pinsent Masons (Australia), its former solicitors. Técnicas Reunidas challenges the decision of the primary judge (Ball J) to dismiss proceedings seeking an injunction preventing the partners from acting for Downer EDI Engineering Power Pty Ltd (Downer) in an International Chamber of Commerce (ICC) arbitration which commenced around March last year: Técnicas Reunidas SA v Andrew [2018] NSWSC 645. The summons seeking leave to appeal was filed on 12 June 2018 and the parties have cooperated in the preparation of appeal books and submissions to permit its being heard some eight weeks thereafter.
3. Although the judgment was delivered (promptly) after a final hearing occupying two days, leave is required because the rights flowing from the solicitor-client relationship sought to be vindicated do not "involve a matter at issue" or a "property or civil right" which is shown to "amount to or [be] of the value of $100,000" within the meaning of s 101(2)(r) of the Supreme Court Act 1970 (NSW). However, because (a) the rights at stake are important, (b) the matter was fully argued and (c) the submissions involved questions of general principle, there should be a grant of leave. References to the notice of appeal are to the draft notice in the appeal papers.
4. The essential background may for present purposes be stated concisely. Técnicas Reunidas subcontracted Downer to perform works relating to an ammonium nitrate plant in Western Australia. A dispute arose between them. Two of the Australian partners of Pinsent Masons (Messrs Andrew Denton and Michael Battye), who at all relevant times worked in the firm's Sydney office, were retained by Técnicas Reunidas and provided advice to that company at the time that its dispute with Downer was being crystallised. The issues which were the subject of their advice in around August-October 2015 are included within the issues in the pending arbitration.
5. Downer has since early 2015 retained lawyers (Messrs Matthew Croagh and William Leslie Ryan) who were formerly members of the firm Norton Rose Fulbright Australia. (The latter is the twelfth respondent but appears to have been misnamed - contrary to his affidavit and the documentary evidence - as Leslie William Ryan; the orders I propose will correct this apparent misnomer.) These men have at all times been based in Melbourne. They continue to act for Downer in the dispute with Técnicas Reunidas. In the second half of 2017, Messrs Croagh and Ryan (and some of the solicitors working in their team) took steps to join Pinsent Masons (Australia), bringing with them their client Downer in December 2017, while the Australian firm and the associated firms elsewhere in the world put in place procedures which were said effectively to quarantine the information derived from work done for Técnicas Reunidas between August and October 2015.
6. Técnicas Reunidas advances three bases on which its claim to injunctive relief rests, reflecting the three bases identified in Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181: the protection of confidential information, the fiduciary duty of loyalty, and the court's inherent jurisdiction.
7. First, by grounds 2-4 of its notice of appeal, Técnicas Reunidas challenges the primary judge's failure to find that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required the respondents being prevented from acting for Downer.
8. Secondly, Técnicas Reunidas relies on the duty of loyalty owed by solicitor to client. It submits that when the former partners of Norton Rose Fulbright Australia became partners of Pinsent Masons, that firm had a continuing retainer with it, such that the firm was in breach of its obligation of loyalty to its client. There is a factual dispute as to whether the retainer by Técnicas Reunidas of Pinsent Masons was terminated in around September 2016 (as the primary judge found), or else continued until late 2017 or early 2018 (as Técnicas Reunidas maintains in grounds 5 and 7). Related to this, there is also a minor factual dispute in ground 6 as to the scope of the retainer, essentially, whether it was confined to "strategic" advice. If the retainer was not terminated, then Técnicas Reunidas submits that there is a clear breach of the duty of loyalty, such that injunctive relief should issue (ground 8). However, Técnicas Reunidas accepts that if the retainer was terminated in September 2016, there is no surviving "duty of loyalty", and such rights as it has are to be found in the protection of confidential information and in the inherent jurisdiction of the court.
9. For its part, the respondents defend the primary judge's finding of termination in September 2016. They also maintain that even if the retainer was not terminated, there was no breach of the ongoing obligation of loyalty. It is common ground that, save for a minor piece of advice sought on 31 May 2016 and provided on 1 June 2016, Pinsent Masons provided no legal services to Técnicas Reunidas after around October 2015.
10. Thirdly, Técnicas Reunidas contends that the respondents have failed to discharge the burden on them of showing that there was no real risk that confidential information in their possession would be misused. Grounds 9, 10 and 11 of its appeal challenge the acceptance by the primary judge of the respondents' evidence as to the systems that were in place.
11. The most convenient course is to summarise the evidence dealing with the formation of the retainer, the work performed and the events leading up to the current dispute, and then to address each of the three bases on which the appeal is based. However, it is desirable to do so in a different order from that which appears in the notice of appeal. That is because there is a contested issue of fact in relation to the termination of the retainer, which is best dealt with first, and also because the invocation of the inherent jurisdiction of this Court to restrain a lawyer from acting in a particular case is "exceptional" and should be used cautiously. This is best addressed last, and only after the other bases relied on by Técnicas Reunidas have been considered.

Formation of the retainer and the advice given by Pinsent Masons in 2015

1. In June 2015, Ms Alma Gómez of Técnicas Reunidas, based in Madrid, advised a London-based partner of Pinsent Masons LLP, Mr Jonathan French, that Técnicas Reunidas had a dispute with an Australian subcontractor. She sought the assistance of a local lawyer. Mr French directed her to Messrs Denton and Battye, based in the Sydney office. Under cover of a letter dated 7 August 2015, Mr Battye provided a "Proposed Costs Agreement", a "Costs Disclosure Statement" and "Standard Terms of Business" regulating the relationship between his firm and Técnicas Reunidas. The letter stated that those documents "apply to the provision of services by Pinsent Masons (Australia) to Técnicas Reunidas SA". The footer of the covering letter stated that Pinsent Masons (Australia) was affiliated with Pinsent Masons LLP, a limited liability partnership registered in England and Wales, and that the two were together referred to as "Pinsent Masons". (In very large measure, this appeal concerns only the Australian partnership. For concision, I shall follow the course adopted by the parties, and refer to the Australian partnership simply as "Pinsent Masons", noting that that is a narrower usage than is found in some of the documents.)
2. The Costs Agreement made provision for acceptance of the offer, including by the performance of work, and stated that each party irrevocably agreed to submit to the non-exclusive jurisdiction of the courts of Victoria over any claim or matter arising under or in connection with it. The Costs Agreement was expressed to prevail over the Standard Terms of Business.
3. The Costs Disclosure Statement defined the "Services and Scope of Work" as follows: "You have asked us to provide strategic advice on issues that arise from time to time on the Tan Burrup Project, including in relation to your subcontract with Downer EDI Engineering Power Pty Ltd." The document identified the "relationship partner" and "matter partner" for the matter (Mr Denton and Mr Battye respectively) and stated that both the agreement and "any non-contractual obligations arising out of or in connection with these Terms" would be governed by and construed in accordance with the laws of Victoria.
4. The Standard Terms of Business relevantly dealt with confidentiality, conflicts and termination as follows: "9. … We may in the past have advised, or may now or in the future advise, other clients whose interests differ from yours. In advising such other clients we may come into possession of confidential information which would be material to your matter. In addition, confidential information we hold about you may be material to such other clients' matters. You agree that our duty of confidentiality to you will be satisfied by putting appropriate safeguards (such as an effective information barrier) in place, in accordance with applicable rules, to ensure that access to your relevant confidential information within Pinsent Masons is restricted. Where such measures are in place, you agree that you will not seek to prevent us from acting for other clients by reason of our holding your confidential information. … 10. We have procedures designed to prevent us from acting for one client in a matter where there is or could be a conflict with the interests of another client for whom we are acting. If you are aware or become aware of a possible conflict of this type, please raise it with us immediately. If a conflict of this nature arises, then we may be able to continue to act for both you and the other client (subject to our compliance with paragraph 9 (Confidentiality and disclosure), provided each of you gives informed consent to us so acting. If such consent is not given by both parties then it will be up to us, taking account of legal constraints, professional rules and your and the other client's interests and wishes, to decide whether we should continue to act for you only, or for the other client only, or for neither. ... 19. You can ask us to stop work on any of your matters at any time by writing to us. We can also cease work on any of your matters by giving seven days written notice (or shorter period if this is reasonable in the circumstances) where: • there is a conflict with our professional obligations; • we are required by law to cease working for you; • you fail to pay any invoiced costs; • you fail to provide us with trust money when requested; • you indicate you have lost confidence in us; • you fail to accept an offer of settlement which we think is reasonable; • we consider we have a conflict of interest in continuing to act for you; • we consider we are not receiving prompt and proper instructions; • there is just cause. You may also end this agreement at any time by giving us notice in writing."
5. The final clause, cl 23, stated that the parties agreed that any dispute or claim arising out of or in connection with the contract or its subject matter should be subject to the exclusive jurisdiction of New South Wales. (It is not necessary to reconcile this with the clause in the costs agreement providing for submission to the non-exclusive jurisdiction of the courts of Victoria.)
6. In accordance with the parties' wishes, I pass over the period from June 2015 to October 2015, during which time Messrs Denton and Battye provided advice to Técnicas Reunidas concerning two claims under the Construction Contracts Act 2004 (WA) made against it by Downer. The firm charged some $98,000 for its advice.
7. Lavan Legal, a local Western Australian firm, was retained by Técnicas Reunidas in that adjudication as solicitors on the record, and appears to have had the primary task of obtaining evidence and drafting documents, with Pinsent Masons being asked from time to time to review those documents as well as to provide a second opinion on the overall approach being adopted. During that period, the contract between Técnicas Reunidas and Downer came to an end (the legal characterisation of what occurred is a central issue in the arbitration).
8. There is a dispute whether the advice provided by Messrs Denton and Battye was a "central" issue, to use the term favoured by Técnicas Reunidas in oral submissions in chief, or but "one of many", as it was described by Pinsent Masons in response, or indeed the "critical" issue, as it was put in reply. For reasons stated later, it is unnecessary to resolve this dispute, and in any event reasons for resolving it could not be provided without disclosing considerably more of the detail of the dispute in 2015 and the issues raised in the arbitration than either party, as I understand it, wishes to have made public in this judgment. I shall proceed on the basis (suggested by Técnicas Reunidas) that the advice of Messrs Denton and Battye contributed to conduct of Técnicas Reunidas which is an important aspect of the pending arbitration.
9. It appears that, save for one matter mentioned below, no advice was given by Pinsent Masons after October 2015. At that stage, it appears that the expectation of both Técnicas Reunidas and Pinsent Masons was that an arbitration was likely. Mr Battye had written in September that "it is so necessary in this case to develop a strategy for seizing the initiative away from Downer and preparing for the arbitration which appears increasingly likely". A few days later, Mr Denton provided a "Note on Dispute Resolution" explaining the "Key Stages of an ICC Arbitration". He said of it that "This is of course more relevant to the medium/longer term situation but nevertheless I hope that you find it useful". An "Issues and Strategy Note" recommended taking a "number of immediate steps" in preparation for an ICC arbitration.
10. So far as appears from the evidence, the steps recommended to be taken in preparation for the ICC arbitration, at least insofar as they involved the lawyers at Pinsent Masons, were not taken. Rather, nothing at all seems to have happened in relation to the dispute with Downer for the next 4 months.

The events in 2016

1. There was a meeting between Mr French, Ms Gómez and Mr Fernandez in Madrid in February 2016. Reference to this meeting is found in an email dated 25 May 2016 from Mr French. He wrote that they had agreed at that meeting that Downer was finalising a substantial claim and that "this was probably why Downer had gone quiet in the dispute". No other evidence was adduced as to the purpose of, or what was said in, this meeting.
2. Downer filed a request for arbitration to the Secretariat of the ICC on 4 March 2016. The partner of Norton Rose Fulbright Australia named on the originating process was Mr Croagh. The ICC informed Técnicas Reunidas on 23 March 2016. Técnicas Reunidas retained White & Case to represent it on 26 March 2016. There seems to be no evidence as to whether Técnicas Reunidas learned of or was served with the originating process any earlier. Nor was there any evidence as to whether Técnicas Reunidas had taken steps, in advance of being served with the originating process, to discuss the possibility of a retainer with White & Case in any arbitration.
3. The sequence of events most relevant to the question of termination of retainer comprised four emails between 25 May 2016 and 31 August 2016.
4. In his email of 25 May 2016, Mr French advised that his Australian colleagues had picked up rumours concerning an arbitration, and asked Ms Gómez whether she had heard anything.
5. Six days later, on 31 May 2016, Ms Gómez responded saying: "Downer has indeed filed for arbitration (2 months ago). TR's management decided to engage Anne Veronique Schlaepfer (W&C) to assist TR in the arbitration. Anne Veronique has participated in a number of arbitrations against TR."
6. Ms Gómez also asked for further advice on a settlement deed dated 30 April 2015, which was relevant to the claims made against it.
7. The following day, 1 June 2016, Mr French responded, providing an answer to the question on the deed, but commencing his email as follows: "Many thanks for updating us on the position in respect of the arbitration. We note that you have appointed White & Case to represent you in the arbitration. We have a strong arbitration team in Australia and with our existing knowledge of the issues in dispute we would hope that there will be other opportunities to assist you in relation to this project." There was no response to that email.
8. The final email is that of Mr French dated 31 August 2016, three months later, the substance of which is as follows: "We appreciate that you have appointed White & Case to represent you in the arbitration, but I thought it worth emphasising that we remain very enthusiastic to assist you here if there is any possibility. We also think that we are very well placed to do so. We have a strong arbitration team based in Australia (as you know) which is rapidly growing. Our team also has a long experience of acting for contractors in arbitrations in Australia and it has an existing knowledge of the issues in dispute. We would welcome the chance to discuss how we could assist you, either independently or in some kind of co-counsel role with White [&] Case whereby, for example, we provide the in-country support. If you think there might be any value in discussing directly with us, please let me know and I will suggest some times in the next couple of weeks for a conference call."
9. Once again, so far as is disclosed by the evidence there was no response.

The events of 2017

1. Mr Ryan, who was formerly a partner of Norton Rose Fulbright Australia, became a partner of Pinsent Masons on 6 December 2017 and Downer engaged Pinsent Masons to act for it in the arbitration on or around 14 December 2017. Mr Croagh followed in January 2018. This had been preceded by an announcement by the firm in August 2017, and the putting in place of systems designed to quarantine the information obtained from the work done in 2015. Those systems are described in more detail below.
2. It is not clear when Técnicas Reunidas learned that the men who as partners of Norton Rose Fulbright Australia had acted for Downer were becoming partners of Pinsent Masons. So far as I can see, there is no evidence directed to whether or not Técnicas Reunidas became aware of the press release in August 2017. Ms Gómez did not supply an affidavit. In this Court, submissions proceeded on the basis that Técnicas Reunidas first learned of the move when Ms Antoinette Jucker, partner and Compliance Officer of Pinsent Masons LLP based in London, wrote to Ms Gómez on 27 November 2017 advising her of the move and the fact that her firm would be appearing for Downer and that steps had been taken to protect Técnicas Reunidas' confidential information.
3. Ms Gómez protested, by email dated 6 December 2017, but not on the basis that Pinsent Masons was currently retained to act for it. Further, at the first hearing of the arbitral panel, in January 2018, shortly before Supreme Court proceedings were commenced, the lawyer appearing for Técnicas Reunidas referred to "the duty of loyalty which counsel has to a former client" (this was read out loud from the transcript in open court without objection when the appeal was heard).

Duty of loyalty and whether the retainer was terminated in September 2016

1. The partners of a law firm may not normally act for and against the same client. That reflects the requirements of r 11 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) and (Vic). It also reflects the fiduciary nature of the solicitor client relationship: acting both for and against a subsisting client gives rise to a conflict.
2. However, as Lord Millett explained in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 at 234-235, there is a large difference between cases of existing clients and former clients, because only in the former is there a subsisting fiduciary relationship. The Conduct Rules likewise differentiate the obligations owed to former, as opposed to current, clients.
3. It has been held in a number of Victorian decisions (notably, the ex tempore decision of the Victorian Court of Appeal in McVeigh v Linen House Pty Ltd [1999] 3 VR 394; [1999] VSCA 138 and that of Brooking JA in Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501; [2001] VSCA 248) that a solicitor owes a duty of loyalty to a former client. Those decisions are inconsistent with the weight of Australian authority, including what was said in this Court in Cooper v Winter [2013] NSWCA 261 and Maxwell-Smith v S & E Hall Pty Ltd (2014) 86 NSWLR 481; [2014] NSWCA 146 at [24]. In these proceedings, Técnicas Reunidas has consistently disavowed reliance on a duty of loyalty owed to a former client (and notwithstanding that the Costs Disclosure Statement provides that any non-contractual obligations arising out of it would be governed by and construed in accordance with the laws of Victoria).
4. Hence the significance of whether the retainer was terminated in September 2016 or continued until November 2017.

Reasons of the primary judge and submissions of Técnicas Reunidas on termination

1. The primary judge addressed the question of termination of retainer at [41]-[43] as follows: "41 ... [T]he retainer between TR and PM was terminated well before PM commenced acting for Downer; and it was not terminated by PM. 42 TR submits that the retainer could only be terminated in accordance with cl 19 of the standard terms that formed part of the retainer and that that clause only permitted termination in writing by TR at any time or termination in writing by PM on seven days' notice (or a lesser period where necessary) for the reasons set out in the clause. TR submitted that neither party gave written notice of termination of the retainer until PM gave notice that it intended to act for Downer in the arbitration. 43 I do not accept that submission. In my opinion, the retainer came to an end in September 2016. Although the written retainer was expressed in very broad terms by reference to the provision of strategic advice in relation to the 'Tan Burrup Project', it is plain from what happened that the retainer was limited to providing strategic advice in relation to TR's disputes with Downer in relation to that project. That advice was given during the period from June to September 2015. The disputes between TR and Downer became the subject of the arbitration and TR chose to retain White & Case to act for it in that arbitration. In his email dated 31 August 2016, Mr French proposed to Ms Gomez that, if there was any value in discussing how PM might continue to assist TR, they could arrange a conference call to do so. Ms Gomez did not reply to that email. The only inference that can be drawn from that fact is that TR regarded the work that PM had undertaken for it under the retainer as being complete and that consequently there was no need for further discussion. That conclusion is reinforced by the fact that there was no further contact between TR and PM until Ms Jucker's email dated 27 November 2017. It is apparent that any need TR had for strategic advice from PM in relation to the project was overtaken by the commencement of the arbitration by Downer and TR's decision to retain White & Case. The fact that Ms Gomez asked Mr French a discrete question in response to his email dated 25 May 2016 does not undermine that point. The likelihood is that Ms Gomez asked the question out of politeness, given that it was clear from her response that TR had chosen to use White & Case in connection with the arbitration. It is not evidence that TR intended from time to time in the future to seek strategic advice from PM in relation to the dispute."
2. It may be seen that there were in substance two, or perhaps three, strands to the reasoning of the primary judge on termination. One was that any need by Técnicas Reunidas for strategic advice ceased when White & Case was retained. Another was that the only inference to be drawn from the non-response by Ms Gómez was that the work was complete. A third, possibly, is that the arbitration fell outside the scope of the retainer which was confined to the "Tan Burrup Project".
3. Paragraph 42 accurately reflects the submission made by Técnicas Reunidas to the primary judge, which was that "Neither side had terminated the retainer (which could only be done in writing and, if by Pinsent Masons, only on limited enumerated grounds which do not apply in this instance)". However, in this Court, Mr Dick SC who with Mr Barnett appeared for Técnicas Reunidas accepted that cl 19 was not exhaustive of the ways in which the retainer could be terminated. For example, an oral statement would suffice. That concession was properly made. Clause 19 is expressed to be facultative, rather than exhaustive, and there is no reason to construe the contract as requiring a client to give written (as opposed to, say, oral) notice before terminating a retainer.
4. Nevertheless, Técnicas Reunidas submitted that it should not have been inferred that the retainer came to an end in September 2016, without Pinsent Masons advising that that had occurred. Rather, the proper inference was that Pinsent Masons remained bound to provide further advice, including in an advisory or overseeing capacity in relation to any aspect of the ongoing arbitration.
5. Técnicas Reunidas also submitted that the primary judge erred insofar as his reasons were based on Pinsent Masons' retainer being confined to "strategic" advice, and that his Honour erred in treating the words "including in relation to [the Downer subcontract]" as qualifying and restricting the more general words which preceded them.
6. Técnicas Reunidas proposed as the test whether, if in October 2016 it had asked Pinsent Masons for further advice on some discrete aspect of the ammonium nitrate plant, would the firm have issued a further disclosure letter. It submitted that no further letter would have issued, and that it followed that the retainer could not have been terminated or abandoned in September 2016. It also relied on what occurred in relation to the discrete advice that was requested on 31 May 2016, and promptly provided the following day, as confirmatory of the above.
7. I would accept some of Técnicas Reunidas' submissions. The fact of the matter is that Pinsent Masons was asked to review individual documents prepared by Lavan Legal, and did so, including at the level of very pedestrian detail (for example, the first paragraph of Mr Battye's email of 24 August 2015 and the 3rd and 4th paragraphs of his email of 16 September 2015). There is no suggestion that that was regarded as outside the scope of the retainer. All of this tends to confirm that while the main subject of the retainer was "strategic advice", in contrast to the day-to-day carriage of the matter by Lavan Legal, the wording in the Costs Disclosure Statement did not confine the firm's retainer to such advice. However, little turns on this point.
8. Insofar as the primary judge relied on the proposition that retaining White & Case was inconsistent with any continuing retainer by Pinsent Masons, then I would also respectfully disagree. The retainer of one prominent law firm in an arbitration is not necessarily inconsistent with a client retaining another for the purposes of review, oversight, and obtaining a second opinion. That is not to ignore the considerable difference between Técnicas Reunidas' retaining Pinsent Masons to review the work and give strategic advice when it was faced with two fast-moving building adjudications in Western Australia and had retained Lavan Legal, and what was later proposed by Pinsent Masons in relation to the arbitration after White & Case had been retained. However, I do not consider that an overlapping retainer can be ruled out on the grounds of inconsistency. As Mr Dick submitted, there might come occasions in the course of the arbitration when Técnicas Reunidas might wish to have the benefit of a second opinion. Accordingly, I respectfully disagree with aspects of the reasoning of the primary judge insofar as it turned upon the retention of White & Case being inconsistent with anything other than the termination of the retainer of Pinsent Masons.
9. However, I agree with his Honour's conclusion, and what I regard as the principal strand of his reasoning. By September 2016, client and solicitor had brought the retainer to an end. They had done so diplomatically and relatively politely and without saying as much in so many words. That did not deny legal efficacy to what occurred. An unanswered email can itself be powerful evidence of a party's attitude to an ongoing relationship.
10. "Whatever the terms of a contract may be, it is possible for the parties so to conduct themselves as mutually to abandon or abrogate it": Summers v Commonwealth (1918) 25 CLR 144 at 151; [1918] HCA 33. Thus, client and solicitor can agree, formally or informally, to bring their relationship to an end. No differently from any other form of agreement, the question is one of the intention objectively manifested by the parties. It is not necessary for there to be a formal offer and acceptance in order to conclude that there has been an agreement to bring the retainer and contract to an end.
11. In Vroon BV v Foster's Brewing Group [1994] 2 VR 32 at 82-3, Ormiston J rejected the proposition that it was necessary to identify offer and acceptance in order for contractual relations to have been formed. His Honour said (at 81): "... I am prepared to accept ... that agreement and thus a contract can be extracted from circumstances where no acceptance of an offer can be established or inferred and where the most that can be said is that a manifestation of mutual assent must be implied from the circumstances. In the language of para. 22(2) of the Second Re-statement on Contracts: 'A manifestation of mutual assent may be made even though neither offer or acceptance could be identified and even though the moment of formation cannot be determined'."
12. In Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 97,326 at 11,118, McHugh JA said, with the concurrence of Hope and Mahoney JJA: "it is an error 'to suppose that merely because something has been done then there is therefore some contract in existence which has thereby been executed'. Nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words. The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract."
13. The principle that a contract may be inferred from acts and conduct, as well as or in the absence of words, is settled law. The passages above were approved by Heydon JA in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 as well as in numerous subsequent cases, including most recently in this Court in Crowe-Maxwell v Frost (2016) 91 NSWLR 414; [2016] NSWCA 46 at [84], by the Western Australian Court of Appeal in Melreef Pty Ltd v Glenn [2015] WASCA 111 at [20] and the Victorian Court of Appeal in White v Timbercorp Finance Pty Ltd (in liq) [2017] VSCA 361; 123 ACSR 284 at [145]. It was with a measure of understatement that Allsop J (as he then was) said in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833 at [369]: "[A] number of authorities discuss the need not to constrict one's thinking in the formation of contract to mechanical notions of offer and acceptance."
14. The same approach applies to agreements to conclude a relationship. Although it is common to refer to "abandonment" as a separate doctrine, the preferable view is that the contract has been discharged by inferred agreement. This was stated by Dixon CJ and Fullagar J in Fitzgerald v Masters (1956) 95 CLR 420 at 432; [1956] HCA 53: "There can be no doubt that, where what has been called an 'inordinate' length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them, it may be inferred that the contract has been abandoned. ... What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that (in the words of Rowlatt J) 'the matter is off altogether'." (citations omitted).
15. That principle has very commonly been applied, including, in this Court, in Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [306]. A recent example is found in the judgment of Murphy and Beech JJA and Pritchard J in Tonner v Delaporte [2018] WASCA 115 at [114]. In Ryder v Frohlich [2004] NSWCA 472, a case concerning whether a partnership had come to an end when one of the partners joined another firm, on which Pinsent Masons relied, McColl JA said at [136], with the agreement of Hodgson JA and by reference to earlier authority, that "[w]hether there is abandonment or abrogation of a contract is a matter of fact to be inferred from an objective assessment of the conduct of the parties." In Protector Glass Industries Pty Ltd v Southern Cross Autoglass Pty Ltd [2015] NSWCA 16 at [98], Barrett JA (with whom Meagher and Gleeson JJA relevantly agreed - see at [21]-[22] and [111]) said: "The nature of the inquiry to be made when it is alleged that the parties to a contract have abandoned that contract has recently been discussed in Fazio v Fazio [2012] WASCA 72 and Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd [2014] VSCA 32. In the former case, Murphy JA said at [74]: 'The abandonment of a contract, in the sense of the mutual release of future obligations, being an inferred agreement, does not depend upon the subjective intention of the parties, but upon whether their conduct (both acts and omissions) viewed objectively manifests an intention to discharge the contract ...'"
16. Applying those principles, the appropriate finding is that drawn by the primary judge, namely, that solicitor and client are to be taken to have agreed to bring the retainer to an end by September 2016. By that time, the following events had happened: 1. Contrary to Pinsent Masons' recommendation, Técnicas Reunidas had not taken steps involving Pinsent Masons to prepare for the anticipated arbitration at the end of 2015 and in early 2016. 2. In March 2016, Técnicas Reunidas learned that the arbitration had been commenced, and it retained another firm. 3. Neither at that stage, nor in April or May, did Técnicas Reunidas tell Pinsent Masons of the arbitration or the fact that it had retained another firm. 4. Only in June 2016, after Pinsent Masons had made an inquiry of it, did Técnicas Reunidas advise that it had, months earlier, retained White & Case. 5. True it is that at that time, Técnicas Reunidas asked for, and promptly received, a small item of advice from Pinsent Masons relating to one aspect of its dispute. However, what matters most is the absence of any response to two requests by Pinsent Masons to have some involvement in the matter. 6. First, there was no response to Mr French's statement that his firm had "a strong arbitration team in Australia and with our existing knowledge of the issues in dispute we would hope that there will be other opportunities to assist you in relation to this project." The overture was not framed as an explicit request, but its sense is clear. 7. Secondly, there was no response to Mr French's follow-up email, three months later, reiterating those matters, stating how enthusiastic his firm remained to assist, and suggesting a conference call "[i]f you think there might be any value in discussing directly with us".
17. There was no evidence to suggest that some other inference should be drawn from the non-responses from Ms Gómez. One email may be overlooked, although Mr French had copied in Mr Fernandez. But the second, three months later, from the partner of the firm who had formerly acted in relation to the dispute, met the same fate. Nor was there any evidence that Ms Gómez was on leave, or on assignment elsewhere. (Indeed, although every communication between Técnicas Reunidas and Pinsent Masons in 2015 was, so far as the evidence discloses, with Ms Gómez, no affidavit was supplied by her.)
18. True it is that Dixon CJ and Fullagar J referred to an "inordinate" length of time being allowed to elapse. What amounts to an "inordinate" time will depend on the particular case. It is relative, as McColl JA observed in Ryder at [137]. In the present case, it may confidently be inferred from the three months which passed in June, July and August 2016 that the client no longer wished to retain the solicitor. The relevant time-scale is reflected in the following uncontroversial evidence. 1. The responses by Pinsent Masons to requests for advice in August, September and October 2015 were very prompt. Advice was regularly sought and provided in an urgent timeframe (normally, less than 24 hours), consistently with the time constraints on building adjudications, and the time differences between Spain and Australia. 2. Then, after an eight month effective silence, when Ms Gómez requested advice on 31 May, once again it was provided within 24 hours - even though there appears to have been no foreshadowing of the need for advice. 3. Throughout the period when advice was being given, Pinsent Masons had emphasised the need to prepare for the likely arbitration, and had provided a timeframe identifying the things that would be required if one eventuated. 4. On 1 June 2016, Pinsent Masons responded to Técnicas Reunidas' request for advice within one business day. Técnicas Reunidas failed to respond to Pinsent Masons' overture to assist. 5. Then, finally, on 31 August 2016, there was once again no response to Pinsent Masons' follow-up email and further request.
19. Ms Gómez's failure to respond - twice - to pointed overtures as to the possibility of some ongoing role for Pinsent Masons is not consistent with Técnicas Reunidas' case that the firm remained on retainer to provide assistance if it was required. It does not matter whether the delay be categorised as "inordinate" or whether Ms Gómez's silence conveyed an implied negative response to the overtures to be of further assistance. Indeed, both characterisations are available. Either way, the retainer was at an end, and the firm was free to act self-interestedly.
20. I do not accept the test proposed by Técnicas Reunidas of hypothesising what would occur if, contrary to the fact, Ms Gómez had asked for further advice from Pinsent Masons in 2016, and then assessing whether or not the firm would have supplied a further disclosure letter. For one thing, the punctiliousness with which a firm complies with its disclosure obligations is one thing (especially bearing in mind that it was dealing with a sophisticated off-shore client which was accustomed to obtaining the benefit of advice on a very tight time-frame); whether it was subject to a continuing obligation of loyalty to a client is another. Further, and more importantly, I do not accept that the test is the right one. The question is whether the retainer (and therefore the duty of loyalty owed to a subsisting client) had come to an end. One does not answer that question by hypothesising a request for advice by Técnicas Reunidas, and then assessing how Pinsent Masons would respond to that hypothetical request. Rather, legal analysis is based on what was in fact objectively manifested by the parties, in accordance with what is stated in the authorities, namely, whether there was an objectively manifested intention that the contract has been discharged.
21. Técnicas Reunidas accepted that its grounds of appeal based on breach of a duty of loyalty were dependent upon setting aside the finding of fact that the retainer had terminated in September 2016. However, Pinsent Masons maintained that even if there were a continuing retainer extending until November 2017, there was still no breach of duty. Pinsent Masons also complained, not without force, that Técnicas Reunidas had not engaged with this issue in its submissions. I have considered whether to deal with these submissions. To do so would involve construing the Standard Terms of Business (cl 10 of which on one view expressly gave to the firm a choice of continuing to act where there was a conflict) and addressing in more detail the nature of the issues in the arbitration, in circumstances where the reasoning will have no impact upon this Court's order and where the parties have urged the Court to provide reasons which are expeditious and minimal. In the circumstances, I shall take the same course as the primary judge and not address the further arguments advanced by Pinsent Masons.
22. For those reasons, these grounds are not made out.

Protection of confidential information

1. It was common ground that Pinsent Masons holds confidential information of Técnicas Reunidas and is under an obligation to keep it confidential. The firm took steps to put in place a regime such that when Messrs Croagh and Ryan (in Melbourne) joined the partnership, they would not obtain access to that information. There was a great deal of evidence given by Pinsent Masons as to the steps which were put in place. None of it was controversial, insofar as Técnicas Reunidas required none of the deponents to attend for cross-examination.
2. Much of it was summarised by the primary judge at [22]-[25]. "22 Conscious of the potential conflict, PM took steps to put in place information barriers designed to protect the confidential information of TR before the arrival of the partners and staff working on the arbitration for Downer. Those arrangements were overseen by Ms Antoinette Jucker, who is PM's Compliance Officer for Legal Practice based in London. The arrangements were put in place in accordance with established procedures set out in a manual prepared by PM called 'Information Barriers, Protocols and Insider Lists - Procedural Guide'. Ms Jucker says that on 3 October 2017 she requested 'an IT Lockdown of the Tecnicas Matter [electronic] workspace … that holds the matter related documents and emails' so that access to that workspace was restricted to Messrs Denton, French and Battye. That lockdown was implemented on 4 October 2017. Ms Jucker gives evidence of some modifications to that access in November and December 2017 to permit Ms Donnelly and Mr Perl to have access to enable them to file additional documents and emails and to permit an employee to print a hard copy of the file for Ms Julie Herriott, the Head of Risk & Compliance Operations with PM, who is also based in London. On 22 November 2017, Ms Herriott also requested that all hard copy documents relating to the TR matter be sent to her and, following receipt of those, the hard copy documents have been archived in London with access limited to Ms Herriott or stored in a locked cabinet in PM's London office to which only Ms Herriott has a key. On 8 January 2018, access to the Tecnicas Matter workspace was further restricted to Ms Jucker and Ms Herriott only. 23 On 23 November 2017, PM prepared an information protocol in relation to the arbitration. The protocol gives a brief history of PM's involvement with TR and Downer and identifies the persons at PM who continue to work on the arbitration for Downer (referred to in the protocol as the 'Downer Team') and the persons who gave advice to TR (referred to as the 'Historic Tecnicas Team'). The protocol states that no work on the Downer matter may be conducted in or from the Sydney office of PM. It also relevantly states: 2 No member of the Historic Tecnicas Team may discuss the Historic Tecnicas Matter with anyone other than a fellow member of the Historic Tecnicas Team. 3 While this Protocol does not prevent members of the Historic Tecnicas Team engaging as necessary with members of the Downer Team on matters pertaining to the practice and clients/potential clients of Pinsent Masons Australia, they must ensure that they do not converse or correspond with any member of the Downer Team on either the conduct of the Arbitration by the Downer Team or the Historic Tecnicas Matter. 24 Each partner and employee of PM who works for Downer on the arbitration or who gave advice to TR has been provided with a copy of the protocol. Each has also signed a personal undertaking. The undertaking signed by the members of the Historic Tecnicas Team states: (a) I will keep to myself and not disclose to any person any Tecnicas Confidential Information (save as required by law); and (b) for so long as Pinsent Masons Australia is acting in the Arbitration, I will not discuss or knowingly permit to be discussed in my presence the Historic Tecnicas Matter or the Tecnicas Confidential Information including, without limitation, discussion on the same with any member of the Downer Team. 25 'Tecnicas Confidential Information' is defined to mean 'all confidential and/or privileged information belonging to Tecnicas and relating to the affairs of Tecnicas which has become available to Pinsent Masons Australia and Pinsent Masons LLP and certain of its personnel in the conduct of the Historic Tecnicas Matter'. Similar undertakings have been given by members of the Downer team. The undertakings are given to PM, although during the course of the hearing they were offered to the Court if the Court considered that that was an appropriate condition of refusing the relief sought by TR."
3. Further, Messrs Croagh and Ryan gave evidence that they observed the obligations upon them, stating only that they were working on the Downer arbitration and not speaking with any of their new partners about that topic. Neither man was required for cross-examination.
4. The onus rests with the firm to establish the heavy test stated in Prince Jefri Bolkiah at 237 that there is no risk (in the sense of no real risk, as opposed to a risk that is merely fanciful or theoretical) of disclosure. Contrary to a submission advanced by Pinsent Masons, I do not accept that there was merely an evidentiary onus upon the firm. That is inconsistent with the reasoning and outcome of Prince Jefri Bolkiah, and with the treatment of the principle in standard works, including T Aplin et al, Gurry on Breach of Confidence, (2nd ed, 2012, Oxford University Press) at 404. But bearing in mind the nature of the work, and especially the fact that the new partners of the firm were located in Melbourne, while those who had formerly acted for Técnicas Reunidas were in Sydney, the unchallenged and comprehensive evidence adduced by Pinsent Masons discharged that heavy onus.
5. Técnicas Reunidas confined its case on appeal to one point. It complained that a single document had been disclosed in the arbitration contrary to the regime which had been put in place; it followed, so it was said, that Pinsent Masons had failed to discharge its onus. Técnicas Reunidas further complained that this submission had not been considered by the primary judge.
6. The latter point may be put to one side immediately. I think the better view is that the primary judge did consider it. Much of his Honour's reasoning is compressed, reflective of the parties' desire for all aspects of their dispute to be kept confidential. The submission is reflected in his Honour's reasoning at [49] and [52]. But nothing turns on this. This appeal is by way of rehearing, and Técnicas Reunidas' submissions either are or are not well-founded.
7. The document which was disclosed was the retainer letter. No real attempt was made on appeal to maintain that the letter was inherently confidential so as to attract equitable protection. Rather, Técnicas Reunidas' point was that the document was one of many which was promised to be kept securely, and away from those conducting the arbitration, and that promise was not observed.
8. The document became exhibited to an affidavit sworn in the arbitration by Mr Emilio Gomez Acevedo, the Director of the Legal Department of Técnicas Reunidas. That affidavit was itself a little peculiar, insofar as it was filed in advance of a hearing on 20 January 2017 not in support of any application, but "For the only purpose of informing the Arbitral Tribunal about the seriousness of the issue". The affidavit stated that in June 2015 "we asked Pinsent Masons to give TR legal and strategic advice on various issues concerning the contractual relationship between TR and Downer". In response, the retainer was exhibited to an affidavit. When complaint was made of this, the documents were removed from what had been provided to the tribunal. However, a few weeks later, Ms Thomas, a solicitor who had formerly been employed at Norton Rose Fulbright Australia, located a copy of the document in the "Downer Arbitration workspace" (a place where it should not have been). She took steps to have the document removed without looking at it, and the solicitors acting for Técnicas Reunidas were advised of that fact. Again, there was no challenge to any of her evidence.
9. There was a mistake made in relation to that document, which was quickly acknowledged by the firm. I see no error in the primary judge accepting that this did not materially tell against the efficacy of the measures which had been put in place. No attempt was made at trial or in this Court to develop a theory of how disclosure could occur in the future, no doubt reflecting the forensic decision not to cross-examine any of the Pinsent Masons witnesses who gave evidence on this issue. The evidence of Ms Thomas shows that the systems in place (not to mention the probity of the solicitors involved) ensured that there was no subsequent disclosure.
10. I am persuaded that the unchallenged evidence of Pinsent Masons, read in the light of the actual events which have occurred in relation to the retainer letter, discharges the onus that firm bears. In reaching that conclusion, I have also placed reliance on the geographical separation of the people involved between August and October 2015 from those currently involved in the arbitration, and the fact that the information barriers were not ad hoc, but rather reflected existing and well-developed procedures to protect the confidential information of former clients.
11. These grounds are not made out.

The Court's inherent jurisdiction

1. The parties were agreed that, in accordance with what was said by Brereton J in Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 at [76]: "• [T]he court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice. • The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice. • The jurisdiction is to be regarded as exceptional and is to be exercised with caution. • Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause. • The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief." (citations omitted)
2. The respondents to this appeal are partners of the Australian firm Pinsent Masons. It was accepted that all are "Australian lawyers" for the purposes of this Court's inherent jurisdiction to supervise its officers: see Legal Profession Uniform Law (NSW), s 25.
3. Mr McHugh SC (who with Mr Tyson appeared for the respondents) submitted that because the arbitral process preserved the parties' confidentiality, the considerations based on the appearance of justice underlying this ground were muted in their application to arbitrations. Mr Dick disagreed. It is not necessary to resolve the issue. I proceed on the basis, favourable to Técnicas Reunidas, that the test is that which would be applied in a court.
4. Técnicas Reunidas submitted that the vice in the present case was that Pinsent Masons had given advice to it informing the steps it had taken when its dispute with Downer was being crystallised, and now the same firm was, in the arbitration, attacking those very steps. Despite the point being raised, repeatedly, it was not said that there was any actual threat to the integrity of the arbitral process. There was no suggestion, for example, that one of the parties would be disadvantaged because in some way the lawyers might feel constrained not to press any particular point. There was no suggestion that any might be a witness in the arbitration, or that there might be a claim made against the firm. Rather, Técnicas Reunidas relied merely on the fact that the firm was now acting against its former client in relation to the same dispute that gave rise to an occasion for the exercise of this Court's jurisdiction: "The essential problem from the standpoint of an independent observer concerned with the due administration and appearance of justice, is that Pinsent Masons advised and permitted the applicant to take a position vis-a-vis Downer which the firm, having changed sides, now asserts in the Arbitration has consequences favourable to Downer and adverse to the applicant."
5. Although everything that could properly be said in support of these grounds was put, and it was at the forefront of Técnicas Reunidas' case, there is nothing in the point, and for a number of reasons.
6. First, in substance the submission is merely a rebadged invocation of a duty of loyalty that survives the termination of the fiduciary relationship. Técnicas Reunidas denied any reliance upon a duty of loyalty surviving termination of retainer, as noted above. But in its submission invoking the inherent jurisdiction, Técnicas Reunidas points to nothing more than the fact that a law firm is acting against a former client in a dispute in which a solicitor had given advice. The exceptional jurisdiction turns on consequences, actual or perceived, to the administration of justice or the integrity of the legal system. It is not made out merely by a firm acting against a former client unattended by any such consequences, but that is all that Técnicas Reunidas relies upon.
7. Secondly, there would be far-reaching consequences in relation to Ministers, statutory offiers and public authorities if Técnicas Reunidas' submission reflected the law. Suppose a barrister or a firm of solicitors gave advice to a Minister, or a statutory officer (such as the Commissioner of Taxation or the Director of Public Prosecutions) or a regulator (such as ASIC or the ACCC) as to a course of conduct in relation to a policy or some other operating procedure with ongoing consequences for the way in which the client conducted itself, and the client adopted that advice and publicly promulgated the policy or procedure. It would be a surprising result if, after the lawyer/client relationship came to an end, that barrister or firm of solicitors could no longer act against the former client, in circumstances where there was no relevant confidential information, just because the way in which the former client was operating was relevant to the dispute. If this proposition were accepted, there might be significant ramifications in cases involving, say, the Commissioner of Taxation or the Minister with responsibility for the Migration Act 1958 (Cth).
8. Thirdly, Técnicas Reunidas' submission was not said to be supported by any authority, save perhaps for McVeigh v Linen House Pty Ltd [1999] 3 VR 394. That ex tempore decision was remarkable for not mentioning Prince Jefri Bolkiah, although it had been handed down 12 months earlier. Inconsistently with what was held in Prince Jefri Bolkiah, the main strand of reasoning turned on a continuing obligation of loyalty owed to a former client, a proposition which Técnicas Reunidas disavowed.
9. Fourthly, Técnicas Reunidas' submission is artificial insofar as it attaches the inherent jurisdiction to control officers of the Court to firms, as opposed to individuals. There is no such legal person as "Pinsent Masons" (or "Pinsent Masons (Australia)". The firm is a partnership. True it is that the letterhead refers to the Australian partnership being an "affiliated entity" with the international partnership; that does not make the collection of partners a legal person in its own right.
10. Two of the current partners of Pinsent Masons (Messrs Denton and Battye) once acted for Técnicas Reunidas. Another two (Messrs Croagh and Ryan) have for rather longer acted for Downer, and did so as partners of Norton Rose Fulbright Australia until around December 2017. Thereafter, they did so as partners of their new firm, Pinsent Masons.
11. As Mr McHugh observed, Kallinicos was a case where Mr Moloney, of the firm Eddy & Moloney, could not continue to act because he was faced with conflicting duties to his client, to the court, and in relation to his own interest as a witness: see at [84]-[86]. The Court's order was that Mr Moloney cease to act, not that his firm cease to act. The Court's inherent jurisdiction is based on its supervision of individual officers, not firms.
12. Mr Dick responded by submitting that the reasonable member of the public would view the matter by reference to the same firm acting for and against the same client, rather than "zeroing in" on the particular partners within the firm. I disagree. I am far from satisfied that the reasonable member of the public who knew that the same Melbourne-based men were acting for Downer, although they had now joined Pinsent Masons, a firm some of whose other members had many months formerly provided advice to Técnicas Reunidas, would be troubled by any threat to the integrity of the judicial process or the due administration of justice, at least in the absence of any particular concern being identified (such as the lawyers being potential witnesses or the possibility of a claim against them).
13. These grounds are not made out.

Orders

1. Although there should be a grant of leave, the appeal should be dismissed. Costs must follow the event.
2. I propose these orders:
3. Grant leave to appeal.
4. Rename the twelfth respondent as "William Leslie Ryan".
5. Direct Técnicas Reunidas to file a notice of appeal in the form of the draft notice of appeal in the appeal books but reflecting order 2 above, and otherwise dispense with the obligations of service.
6. Appeal dismissed, with costs.
7. WHITE JA: I agree with Leeming JA.

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. Decision last updated: 31 August 2018