Husband apprehend that his previous advocates may have possessed his confidential information, if they acted now the advocates of his wife, there is every possiblity of using the same against him , Lordships allowed the appeal . FAMILY LAW – APPEAL – Appeal from the orders made by the Federal Magistrate dismissing the husband’s application to restrain the wife from instructing solicitors who had previously acted for the husband – Where it was argued that although the solicitors have not acted on behalf of the husband for a number of years, the prejudice to the husband is of possible significance FAMILY LAW – APPEAL – Application for leave to appeal – Where the husband contends that leave to appeal was not necessary, as there had been an error of law and because of the serious nature of the application, to deny the husband a right to appeal, where there are proper grounds to argue may cause a substantial injustice to him – Where the wife argued leave was necessary as the orders were procedural in nature – Where it was found that the orders made by the Federal Magistrate were final in nature rather than interlocutory FAMILY LAW – APPEAL – Where it was submitted that the Federal Magistrate’s approach to the husband’s application was contrary to the Full Court’s decision in McMillan where it was said there only needs to be a theoretical risk of prejudice, not proof of prejudice – Where the Federal Magistrate misunderstood the husband’s application and applied the wrong test – Where the central question is whether the solicitors may have confidential information arising out of a solicitor/client relationship which may be used to the advantage of their present client or to the disadvantage of their former client – Ordered that the wife be restrained from instructing or continuing to instruct her solicitors in the proceedings – Substantive proceedings to be adjourned before another Federal Magistrate – Appeal allowed. FAMILY LAW – COSTS – Cost certificate granted to the husband for his costs of and incidental to the appeal.

Manner & Manner [2012] FamCAFC 6 (23 January 2012)

Last Updated: 3 February 2012

FAMILY COURT OF AUSTRALIA

MANNER & MANNER

[2012] FamCAFC 6

FAMILY LAW – APPEAL – Appeal from the orders made by the Federal Magistrate dismissing the husband’s application to restrain the wife from instructing solicitors who had previously acted for the husband – Where it was argued that although the solicitors have not acted on behalf of the husband for a number of years, the prejudice to the husband is of possible significance FAMILY LAW – APPEAL – Application for leave to appeal – Where the husband contends that leave to appeal was not necessary, as there had been an error of law and because of the serious nature of the application, to deny the husband a right to appeal, where there are proper grounds to argue may cause a substantial injustice to him – Where the wife argued leave was necessary as the orders were procedural in nature – Where it was found that the orders made by the Federal Magistrate were final in nature rather than interlocutory FAMILY LAW – APPEAL – Where it was submitted that the Federal Magistrate’s approach to the husband’s application was contrary to the Full Court’s decision in McMillan where it was said there only needs to be a theoretical risk of prejudice, not proof of prejudice – Where the Federal Magistrate misunderstood the husband’s application and applied the wrong test – Where the central question is whether the solicitors may have confidential information arising out of a solicitor/client relationship which may be used to the advantage of their present client or to the disadvantage of their former client – Ordered that the wife be restrained from instructing or continuing to instruct her solicitors in the proceedings – Substantive proceedings to be adjourned before another Federal Magistrate – Appeal allowed. FAMILY LAW – COSTS – Cost certificate granted to the husband for his costs of and incidental to the appeal.

Family Law Act 1975 (Cth) Federal Proceedings (Costs) Act 1981 (Cth)

D & J Constructions Pty Limited v Head (1987) 9 NSW LR 118 Garrey and Crosby [2007] FamCA 696 In the marriage of Thevenaz (1986) FLC 91-748 L and L [2003] FamCA 777 McMillan and McMillan [2000] FamCA 1046; (2000) FLC 93-048 Rakusen v Ellis, Munday and Clarke [1912] 1 Ch 831 Selen and Selen [2009] FamCA 309

APPELLANT:

Mr Manner

RESPONDENT:

Mrs Manner

FILE NUMBER:

BRC

10789

of

2009

APPEAL NUMBER:

NA

72

of

2011

DATE DELIVERED:	23 January 2012

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

May J

HEARING DATE:

28 November 2011

LOWER COURT JURISDICTION:

Federal Magistrates Court

LOWER COURT JUDGMENT DATE:

24 August 2011

LOWER COURT MNC:

[2011] FMCAfam 1066

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Ms Hogan

SOLICITOR FOR THE APPELLANT:

Best Wilson Family Law Pty Ltd

COUNSEL FOR THE RESPONDENT:

Mr Hamwood

SOLICITOR FOR THE RESPONDENT:

Norman & Kingston Solicitors

ORDERS

(1) The appeal be allowed.
(2) The respondent be restrained from instructing or continuing to instruct Mr Anthony Kingston and/or Norman and Kingston Solicitors, during the currency of proceedings in the Federal Magistrates of Australia, Court File No. BRC10789/09.
(3) The substantive proceedings be adjourned for hearing before a Federal Magistrate other than Federal Magistrate Coates.
(4) The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Manner & Manner has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 72 of 2011
File Number: BRC 10789 of 2009

Mr Manner

Appellant

And

Mrs Manner

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. A notice of appeal was filed by the husband on 20 September 2011 appealing orders made by Federal Magistrate Coates on 24 August 2011. Those orders dismissed the husband’s application seeking to restrain the wife from instructing solicitors who had previously acted for the husband.
2. The husband relies on two grounds of appeal. In summary those grounds provide that the Federal Magistrate erred in the application of legal principles causing his Honour to erroneously dismiss the husband’s application (Ground 1) and erred in making findings of fact relevant to the difficulty with the solicitors continuing to act for the wife (Ground 2).
3. Should the appeal be allowed the husband asks that the wife be restrained from instructing or continuing to instruct Mr Anthony Kingston and/or Norman and Kingston Solicitors and that the substantive proceedings be adjourned for hearing before a Federal Magistrate other than Federal Magistrate Coates. The husband also asks that the wife and/or Norman and Kingston Solicitors pay the husband’s costs of an incidental to the appeal and the hearing before the Federal Magistrate, or alternatively, that a costs certificate be granted pursuant to the Federal Proceedings (Costs) Act 1981 (Cth).

HISTORY

4. The written submissions of the husband provide a succinct background to the proceedings. It commences with a chronology:
   1. By Initiating Application filed 13 May 2011, the Wife (“the Respondent”) sought the following final orders:

a. that the document purporting to be a binding financial agreement between the parties dated 16 November 2007 be declared void.

b. the document purporting to be a binding financial agreement between the parties dated 16 November 2007 be declared as having no force and effect.

c. that by way of adjustment of property interests pursuant to s. 79 of the Family Law Act the husband (“the Appellant”) pay to the wife the sum of $3million.

2. The Respondent instructed Mr Tony Kingston of Norman and Kingston to appear on her behalf in the proceedings.
3. In a Response filed 18 July 2011, the Husband (“the Appellant”) sought that the Respondent’s Initiating Application be summarily dismissed and that she pay his costs of and incidental to the proceedings on an indemnity basis.
4. On 16 August 2011, the Appellant filed an Application in a Case (“the Application”) seeking the following orders:

a. that the Respondent be restrained from instructing or continuing to instruct Mr Anthony Kingston and/or Norman and Kingston Solicitors, during the currency of the proceedings in the Federal Magistrates Court in Australia, Court File Number BRC10789 of 2009;

b. that the Respondent and/or Mr Anthony Kingston pay the Appellant’s costs of an incidental to the Application in a Case on an indemnity basis pursuant to s 117 of the Family Law Act 1975 (Commonwealth) and/or Regulation 21.07 of the Federal Magistrates Court Rules 2001 (Commonwealth).

5. On 24 August 2011, Federal Magistrate Coates ordered that the Application be dismissed and that the costs of the same be reserved.
6. By Notice of Appeal filed 20 September 2011, the Appellant appealed that Order.

LEAVE TO APPEAL

5. The husband contends that leave to appeal is not necessary. However, should it be found that leave is necessary it is submitted that “having regard to the material before it, the Court would be satisfied that there has been an error of principle and/or that there has been a substantial injustice to the [husband]”.
6. On one view, the order made by the Federal Magistrate could be considered final in nature rather than interlocutory so that leave may not be necessary.
7. It was argued on behalf of the respondent that leave is necessary because the orders are procedural in nature. Even if this be so, leave should be given because of the serious nature of the application and a substantial injustice could be caused to the husband to deny him a right to appeal where there appears to be some proper grounds to argue (see also paragraphs 106-108 of McMillan and McMillan [2000] FamCA 1046; (2000) FLC 93-048 at 87,741-2).

REASONS OF THE FEDERAL MAGISTRATE

8. The substantive proceedings between the parties concerns the wife’s application for property settlement should a financial agreement made prior to the marriage be set aside.
9. The parties married in November 2007 and separated in October 2008.
10. The application in a case before the Federal Magistrate from which this appeal has been filed concerned the husband’s application to restrain the wife from instructing certain solicitors on the basis that the firm, Norman Kingston Solicitors and the solicitor, Mr Anthony Kingston have previously acted for the husband. The application was opposed by the wife, and inferentially, the wife’s solicitors. Mr Kingston and his firm adopted the view that there could not possibly be a conflict of interest and that they therefore could continue to act for the wife.
11. It was explained by the Federal Magistrate that the material on which the husband relied was reasonably short, being contained in the application’s accompanying affidavit filed 16 August 2011.
12. The Federal Magistrate correctly summarised the relevant facts as asserted by the husband at paragraph 6 of his Honour’s reasons:
    1. That the firm and its predecessor acted for him for 28 years, between 1971 to about 1999, in matters including a number of financial disputes, the legal aspect of a number of business disputes, estate planning requirements and the drafting of a will and a number of purchases and sales of property, and that can be seen at paragraph 7 of the husband’s affidavit filed 16 August 2011.
    2. That Mr Anthony Kingston personally represented the husband in a financial dispute in or around 1999, and that can be seen in paragraph 8 of the husband’s affidavit filed 16 August 2011.
    100. That much of the asset pool for the property orders would also have been dealt with in the husband’s will which was held in the offices of the wife’s solicitors for 24 years, from 1971 to 1995.
    4. That the husband cannot recall the exact content of discussions between himself and Mr Kingston at any particular time, especially in relation to a financial dispute in or around 1999, but it is very possible that Mr Kingston would have learned facts about his life that would jeopardise his position in the primary proceedings or the substantive proceedings, which he could attempt or use to the wife’s advantage.
13. Of the application his Honour said:
    7. Such is the basis of the husband’s apprehension that a conflict of interest might arise, and I underline the use of my term “apprehension” because there is no direct evidence, either in the sworn material or otherwise that there is an actual conflict of interest. Having said that, I am satisfied that the cases have determined that an apprehension of a conflict can be enough to restrain a solicitor from acting in a case.
14. His Honour also summarised the evidence of the solicitor, Mr Kingston:
    9. Mr Kingston corrects the husband’s memory of events and states that the last time the firm acted for the husband was actually in 2004 and not in 1999 as the husband stated.
    10. He states in an affidavit that he started with the firm as an article clerk in 1991 and he referred to the firm’s past system of recording and saving files, and produced, by way of a copy, a card entry with a reference to the husband’s name, a small description, and a closure date for the relevant file.
    11. On the card, or the copy of the card produced, there are six entries between 1995 and 2004, which state the following: [Mr Manner], who is the applicant husband in this application, [M], which is his address, MS336 T..., which I assume stands for [T] and then there are six entries re: UV [Mr J], there is a number and a date, 21 September 1995, and another number. Next entry is. Re: Industrial relations dispute, then a number, then the date, 13 June 1997, then another number; Then an entry, re: seems to be, P/F Kingston, as personal rep, there is a number, the date, 7 July 1999, and then another number; Re: outstanding debt, there is a number, the date, 2 April 2001, and then another number. Then the next entry is, re: UATS, and it looks like, [Z] PL, there is a number, a date, 14 February 2003, and then another number; And then there is the last entry, re: Personal injury claim – [Ms W], then there is a number, a date, 24 June 2004, and then another number.
    12. The numbers, I assume, are file numbers or some mechanism or library cataloguing used within the firm of solicitors, which mean nothing to an outsider, other than that there was a file and there seemed to be a closure date with the smallest of descriptions. I might have missed out one of those entries, which was an outstanding debt, 2 April 2001.
    13. In any case, that is the evidence of Mr Kingston of the filed material or the references to the applicant husband, held by his firm.
    14. He says he can only remember the husband in relation to the last entry, and that is a personal injuries claim in relation to a [Ms W].
        He said he has had a clerk check the “dead” files as they are referred to, and there is no file relating to the husband retained in the office.
        He says files are destroyed after seven years. He does not recall acting in 1999 in a financial dispute for the husband. He does not know if the firm ever held the husband’s will. He also said he presumably had carriage of a matter relating to the husband, but only because by then he was principal of the firm.
    15. It is not contested that otherwise the firm acted at various occasions for the husband, from the early 1970s until 2004.
15. The Federal Magistrate then referred to what he regarded as the legal considerations relating to the husband’s application. It was noted that there is no definition of what a conflict of interest is, and that a conflict “should be apparent when the circumstances of a case are considered.”
16. His Honour said:
    18. I was referred to various cases regarding the conditions necessary to determine that a conflict of interest exists between a solicitor and a client, and in the husband’s case I was referred to both settled cases and the solicitors’ rules.
    19. I will start with the Solicitors Rules, and I was referred to the Legal Profession (Solicitors) Rule 2007, clause (4), which states:

“A solicitor must not accept a retainer to act for another person in any matter against or in opposition to the interest of a person (the former client).

4.1For whom the solicitor or the solicitor’s current or former law practice, or the former law practice, or a partner or employee of the solicitor, or of the solicitor’s law practice, has acted previously, and has thereby acquired information confidential to the former client and material to the matter.”

and:

“4.2 If the former client might reasonably conclude that there is a real possibility the information will be used to the former client’s detriment.”

and then under that rule, which has obviously been printed off from the rules, there is a commentary in referral to a case and the identification that the relationship is one of a fiduciary nature, but that is not necessarily relevant to the question here, which is whether there is a conflict of interest.

...

22. Both Mr Hamwood for the wife and Mr Wilson for the husband took me to cases. I was referred to the cases of Griffis, delivered by the Family Court of Australia on 2 May 1991; McMillan [2000] FamCA 1046; (2000) FLC 93-048 and Perrell & Richter [2010] FamCA 1193, all of which refer, or outline in various forms, the tests which can be applicable in these cases where a conflict has to be determined. (original emphasis)
17. The Federal Magistrate concluded:
    23. It appears to me that despite the solicitors’ rules placing a duty on a solicitor not to put himself or herself into a position of conflict, that there is some room for discretion to be exercised and that discretion can only arise on a consideration of the facts of a case. I take that from the reference to the case of Thevenaz (1986) FLC 91-748 and its consideration by Bryson J of the Supreme Court of New South Wales in D & J Constructions Pty Ltd v Head [1987] 9 NSWLR 118, as referred to in the case of McMillan, one of the cases relied on in this matter, where it was said:

“We must treat each of these cases, not as a matter of form, not as a matter to be decided on the mere proof of a former acting for a client, but as a matter of substance, before we will allow the special jurisdiction over solicitors to be invoked, we must be satisfied that real mischief and real prejudice will, in all human probability result in the solicitor, if allowed, to act.”

24. I am not relying necessarily on the reference to the finding of a real mischief, or a real prejudice simply because that goes to, what are called, the broad and narrow tests and I will refer to that a little later. What I am keeping in mind from that statement is that there must be produced evidence of prejudice, or when an apprehension of a conflict is raised, as is the case here, the possibility of prejudice to the party claiming that the conflict of interest, which may put them in a position whereby confidential information acquired by a solicitor can be used to further the case against them, even if such was used accidentally, or inadvertently. (original emphasis)
18. The husband’s delay in filing his application was then considered. The Federal Magistrate said:
    27. I am less inclined to consider the delay as being a real factor in this case, simply because some people may not realise they have a right created because of a former relationship between themselves and a solicitor when that solicitor suddenly appears acting for the opposite party. The husband, in fact, says he did not realise his position.
19. The Federal Magistrate then continued to consider the husband’s evidence:
    28. I am more concerned with the facts he bases his claim on. There is no dispute that the firm acting for the wife has acted over many years for the husband, and at first blush, it would appear that the firm has very detailed knowledge of the husband’s financial affairs. When I say the firm, of course, I am referring to solicitors and employees of that firm.
    29. But what would then be expected from the husband is evidence that could be particularised as to the types of legal issues the firm has dealt with in relation to his financial affairs, material to the matters now before the Court.
    30. On close examination of the husband’s affidavit, the best evidence he states, as the basis of his application to restrain the wife’s solicitors, is contained at paragraphs 7 and 8 of his affidavit, which, again, I will repeat:

“7. For a period of around twenty-eight (28) years from around 1971 to around 1999, Norman and Kingston Solicitors acted on my behalf in legal matters, including:

(a) a number of financial disputes;

(b) the legal aspect of a number of business disputes;

(c) my estate planning requirements (including the drafting of my will); and

(d) a number of purchases and sales of property.

8. Mr Kingston personally represented me in a financial dispute in or around 1999.”

31. The English language is a remarkable and pliable tool of communication because, reading those paragraphs, a picture is painted of the long association that the husband and this firm have had, yet there is no particularisation of the number of financial disputes, the legal aspects of a number of business disputes, what the will actually contains and whether it refers to a whole list of properties that the husband apparently owns which would have to be disclosed in any case, or the number of purchases and sales of properties.
32. As to paragraph 8 of that affidavit, the husband does not even say what the financial dispute was about in or around 1999. It does not say that any of those disputes are or can be related to the current proceedings, or, more importantly, how they can be related, other than by a broad brush statement in paragraph 11 of the affidavit which states:

“11. I also advised Mr Wilson that although I cannot recall the exact content of discussions between Mr Kingston and myself when he represented me in a financial dispute, it is very possible that Mr Kingston would have learned facts about my life which would jeopardise my position in the primary proceedings as he could attempt to use such facts to [the wife’s] advantage.”

33. That he says Mr Kingston would possibly have learned facts about his life follows some of the statements in some of the cases I have been referred to where restraining orders have been sought.

(own emphasis)

20. The Federal Magistrate determined that the test was “what is the possibility that personal facts could be used to further the wife’s case”. It was found:
    36. The untested evidence of the wife, which is disputed, is that the relationship began in 2006 or thereabouts, and it is not said by the husband that there was any relationship before that.

Even on Mr Kingston’s evidence that is two years after the husband stopped using the firm so time itself must be dissipating the continuing changes of circumstances which occur to people, and of course the changes in relation to the real circumstances of the husband, which he says Mr Kingston would know.

37. On the evidence before me it is not put what are the facts which Mr Kingston, or other employees, may have learned of the husband, which, materially and relevantly, could affect the matter now before the Court.
38. As the husband makes the claim, the onus is on him to put before the Court all material matters, and the word “material” means relevant to both the application in the case and the substantive matters.
39. In my view, it does not matter whether the narrow approach or the broad approach referred to as the tests for determining a conflict of interest, exists or not, there still must be evidence of, or evidence to suggest that there is prejudicial information which a solicitor has which would enliven the next step, that such could be used, either on purpose or inadvertently.
40. The broad approach would be enlivened on the mere possibility of such information existing, and the narrow approach would require more particularisation to show a real mischief or prejudice.
41. Both approaches can be validly utilised, but the Court has to be satisfied that if prejudicial information exists there needs to be evidence of that as the basis for excluding a solicitor.
42. The case before the Court is such that the husband could not even recall the last time he used the services of the wife’s solicitor, with him believing it was 12 years ago and the solicitor confirming that, in fact, it was eight years ago.

(own emphasis)

21. Ultimately, his Honour found that the husband’s case “is just too vague”. Further:
    44. ... While the firm has acted over a long period of time, except from the copy of the card produced by Mr Kingston, I have no idea as to the number of occasions it acted, an important factor in my view, and I have no description of the types of advices given or the information the firm received.

...

48. In my view it is not enough simply to say that a solicitor for one party has acted previously for another party. There must be some real and cogent evidence put before the Court to persuade the Court that a solicitor ought to be restrained.
22. In conclusion it was said:
    49. To restrain a solicitor from acting for a client is an order which should be made in appropriate circumstances, but those appropriate circumstances can only become apparent from the evidence in each particular case. That the husband has not been able to particularise what he says are the facts he relies on is an important consideration here because that has left the Court without evidence to consider.
        It follows that I am not satisfied that the husband’s affidavit material discharges the onus of proof in that regard.

THE APPEAL

23. There was no argument that the Federal Magistrate had the power to make the order restraining the wife from continuing to instruct the solicitors. The Federal Magistrate appeared to consider that the order was sought against the solicitors, it was not, it was rather against the wife.
24. Further, since the decision of Thevenaz and later McMillan, there is no doubt that the central question is whether the solicitors may have confidential information arising out of a solicitor/client relationship which may be used to the advantage of their present client or to the disadvantage of their former client. It is not simply a question of conflict of interest.

Ground 1 – Error in the application of legal principles

25. It is submitted that in light of his Honour’s findings at paragraph 28 of the reasons that “the firm acting for the wife has acted over many years for the husband” and “it would appear that the firm has very detailed knowledge of the husband’s financial affairs” that his decision to dismiss the application is wrong and contrary to law.
26. Further it was said that the following findings “provide a clear indication of the misapplication of principle which permeated His Honour’s reasoning”:
    1. that there was no direct evidence in the sworn material otherwise that there is an actual conflict of interest...
    2. that despite the solicitors’ rules placing a duty on a solicitor not to put him or herself into a position of conflict there is some room for discretion to be exercised and that discretion can only arise after a consideration of the facts of the case.
27. It was submitted that his Honour erred in determining the husband’s application by reference to the principles espoused in Rakusen v Ellis, Munday and Clarke [1912] 1 Ch 831 rather than the principle outlined in McMillan & McMillan [2000] FamCA 1046; (2000) FLC 93-048. It was explained that his Honour applied the very test not followed in McMillan.
28. Counsel submitted that the Federal Magistrate appeared to err in the application of the “narrow” test by requiring that the husband establish that “a real mischief and prejudice will, in all human probability, result in the solicitor if allowed to act”.
29. Counsel for the husband made reference to the decision of the Full Court (Finn, Kay & Moore JJ) in McMillan and particularly the following paragraphs where it was said:
    55. Before leaving these authorities, reference should also be made to the views expressed by Mullane J in Griffis as to what degree of proof of the passage of confidential information a former client has to establish in order to have that information protected. His Honour's view, relying again on Mills and Thevenaz, was that the client need only prove “a prima facie case as to confidential material, the disclosure or use of which by the solicitors in the course of the conduct of the current proceedings for the present client would be prejudicial to the applicant”. His Honour’s reasons were as follows (at 78,600-78,601):

“There was another important point made by the Queensland Full Court in the decision of Mills v Day Dawn Block Gold Mining Co Ltd. As to proof of the confidence, their Honours (at page 63) took the view that where there was a conflict between the solicitor and former client as to whether a confidence had been imparted, if the judges:

‘... were to insist upon actual proof of the existence of such confidence and to insist upon knowing what it was and whether it was likely to prejudice a client's interests, they would compel him to strip himself of the protection which the court usually afforded and the whole mischief he wished to avoid might arise... on the one side the client insisted that he had imparted confidence to Mr Marsland; and on the other side, the solicitor said “I have no confidence”. How could the court decide it? If they took the oath of the attorney against the oath of the client and refused the protection which the client sought, why, then, the matter might proceed, and the mischief which the client feared might arise and the court could afford no remedy. In cases of this kind less mischief would accrue through granting the protection sought than in accepting the oath of the attorney against the client. The client's interests should prevail, and the judge should refuse to determine the matter on the conflicting testimony of the affidavits.’

And: ‘It was not for the judge to determine the conflict of facts but that he should have decided that the client had made out a prima facie case for his protection.’

At page 64 they said ‘If there was any evidence of confidential communication such as there was here the court would not enter upon a judicial enquiry whether it was true or false’. The court would not ask for detailed disclosure where there was evidence of confidence and ‘[t]he court would not weigh conflicting testimony as to confidence when the client swears he has made confidential communications’.

The point did not arise in Rakusen as it was not in issue that there was a confidence which had been given to the solicitor’s partner by Mr Rakusen, and which could be used to the prejudice of Mr Rakusen in proceedings in which the solicitor was acting for Mr Rakusen’s former employer.

The Australian courts have not generally followed this aspect of the Mills decision. It has not usually been discussed but in the D & J Constructions case, (at page 124) Bryson J expressed reserve about such an approach.

Generally, instead of accepting a prima facie case as to the confidentiality of information the Australian courts have indulged in weighing conflicting testimony of the solicitor and his confider. The injunction proceedings have thus in many cases been a venue for the solicitor to disclose confidential information of the confider without his consent by way of establishing that such information is not, despite the general damage of its disclosure, such as would cause particular damage by use for, or disclosure to, the new client in the course of conducting litigation against the confider.

Wills, instruction sheets, tax returns, correspondence between solicitors and clients, advices to clients, advices by barristers, and statements taken by solicitors from clients or officers of client companies, have all been placed in evidence in the course of such proceedings so that the proceedings themselves become a mischief of their own in terms of solicitor/client confidences and the public policy considerations behind them. Resort has even been had to conducting proceedings in camera and confidentiality orders made in an attempt to minimise damage and prejudice to the former client from the proceedings themselves eg see Mallesons Stephen Jaques v KPMG Peat Marwick (at page 6).

The very nature of the proceedings and the perversity of the courts allowing the hearing of such an application to become the venue for lengthy and detailed evidence by the solicitor of information which he received in confidence, or at least the former client alleges was received in confidence, are matters which strongly support the approach of the Queensland Full Court in the Mills case and of Frederico J in Thevenaz. So do the public policies so often declared by the courts that justice must be seen to be done, and the fact that the duty of confidentiality is based in part on the need for public confidence in legal representation and the legal system.

For these reasons the court should follow the approach in Mills that the former client be required only to prove a prima facie case as to confidential material, the disclosure or use of which by the solicitor in the course of the conduct of the current proceedings for the present client would be prejudicial to the applicant.”

56. Finally in this review of the cases decided to date, we draw attention to the fact that in the unreported decision of Stewart (17 April 1997), Lindenmayer J quoted at length from the decisions of Mullane J inGriffis and Kossatz, and went on to accept Mullane J’s exposition of the law. Lindenmayer J was also prepared to follow Mills, as this extract from his judgment shows (underlining added):

“I generally agree with and adopt the analysis of the law which fell from Mullane J in those two cases, and I propose to follow it. In the circumstances of this case, it seems to me that the wife does raise a prima facie case that the solicitors have received from her, during the previous retention of them by the husband and wife, confidential information which may, even quite inadvertently, be used to the advantage of the husband or to the disadvantage of the wife in these current proceedings.

As I have said, she claims to have conveyed confidential information to Ms Maria DeDonatis in relation to a number of matters including, it would seem, her marriage difficulties with the husband, and some allegations by him of infidelity by her and, of course, there was also an involvement by the solicitors at that time in the business affairs of the parties, in the sense that they must have received some information about their general business operations and they may well have received information about the sort of work which each of the parties claimed to do in the business.

Now, all of those matters may be of some relevance, ultimately, to the proceedings in this jurisdiction. As I have said, although the essential facts are denied by Ms DeDonatis, on the basis and the decision and the dicta of the Full Court of Queensland in the Mills case, adopted by Mullane J in Griffis, I am of the opinion that it is not appropriate for me, at this point, to enter into any examination of where the truth lies or to attempt to try an issue of fact about those matters. All that is necessary is that the wife swears that she has conveyed confidential information to the solicitors and that she believes, not unreasonably, that that information may be used against her, or at least to her disadvantage, in these current proceedings. Accordingly, I propose to accede to the application of the wife.”

(original emphasis underline. own emphasis in bold)

30. It was explained that the approach adopted by his Honour was contrary to the Full Court’s decision in McMillan where it was found that “it is sufficient if a party swears that they have conveyed confidential information to a solicitor and that that party believed that the information may be used to his disadvantage in the proceedings”.
31. Further it was submitted that the Federal Magistrate erred in failing to apply the test in McMillan where it was said there only needs to be a theoretical risk of prejudice, not proof of prejudice.
32. Counsel for the husband submitted:
    18. ... in proceeding ... to set our what he “expected” the [husband] to provide in evidence, His Honour misapplied the principles of law wherein it has been held (see the comments in McMillan) that it is not incumbent upon a person seeking an order to prove the content of the confidence but only a prima facie case that the information imparted was confidential. In proceeding as His Honour did (as outlined by the contents of paragraph 29 of the Reasons for Judgment), it is respectfully submitted that His Honour proceeded in error.
33. It was also submitted that his Honour erred in imposing “a requirement that the assertions of confidential information provide to the wife’s current solicitor must be “related” to the current proceedings before the Court” (original emphasis).
34. It was argued on behalf of the husband that although the wife’s solicitors have not acted on behalf of the husband for a number of years, the prejudice to the husband is of “very large significance”. It was explained that recall can be triggered by an event that may subsequently arise and that even subtle matters, such as the husband’s attitude to litigation, may be used against him by his former solicitors. Further, it was said that for the wife’s solicitors to have such information and not utilise it, their duty to the new client, the wife, would not be appropriately discharged. Thus the solicitors would be compelled to use such knowledge.
35. Counsel for the husband submitted that the Federal Magistrate’s constant reference to “prejudicial” and not “confidential” information further evidences that his Honour misunderstood the applicable law.
36. It was submitted on behalf of the husband that his Honour “fundamentally misapprehended the law to be applied by him”, as demonstrated by paragraphs 44 to 47 of the reasons. In supporting this submission it was said:
    23. It was submitted that it can be concluded from the statements expressed therein that the learned Federal Magistrate imposed, impermissibly, an obligation on the [husband] to provide specific details of the information provide to the [wife’s] solicitors before he could be persuaded that a conflict exists. This is contrary to the principles as established in McMillan (supra) and would require, as has been found not to be necessary, the [husband] to waive the privilege that exists in relation to his confidences with the [wife’s] current solicitor in order to established that the same should not act for her.
    24. It is submitted that, in determining (at paragraph 48 of the Reasons for Judgment) that “there must he come real and cogent information put before the Court to persuade the Court that a solicitor ought to be restrained”, the learned Federal Magistrate failed to have regard to the [wife’s] evidence wherein he deposed to the fact that conveyance of confidential information by him to Mr Kingston and his apprehension that such information could be used in a manner prejudicial to him during the course of these proceedings and to Mr Kingston’s evidence that he was ‘presumably the person with carriage of the matters for the [husband] on the basis that he was the principal of the firm at that time.’ (footnote omitted)
37. Counsel for the wife maintained that whilst the Federal Magistrate may have referred to various cases and tests, the words in paragraph 24 of the reasons makes it clear that he understood the correct test. Further that his Honour was correct in paragraph 29 and that the evidence of the husband fell short of what was required.

Ground 2 – Error in findings of fact

38. It was submitted that his Honour erred in finding, contrary to the evidence of the wife, that “there is certainly no relationship between the husband and wife in 1999, or in 2004, when Mr Kingston corrected the husband’s evidence as to the last time the firm acted for him” and that the “untested evidence of the wife (which is disputed) is that the relationship began in 2006 or thereabouts”.
39. It was submitted on behalf of the husband, that the Federal Magistrate erred in proceeding “on the basis that he was being asked to determine an application in circumstances where the parties were not in a relationship until 2 years after the [husband] ceased to use the solicitors currently engaged by the [wife]”, as this was completely contrary to the wife’s case that the parties’ relationship commenced in 1999.
40. In response to ground 2 it was submitted that the Federal Magistrate mistakenly referred to it being the wife’s evidence that the relationship began in 2006 when clearly that was the husband’s evidence.
41. The significance of this is that the solicitor’s last acted for the husband in 2004, some years after the relationship between the parties commenced on the wife’s version.
42. Even if this be a mistake on behalf of the Federal Magistrate it is not material because even if the relationship had commenced after the solicitors ceased to act they could have held confidential information about the husband prior to that time.
43. It was further said:
    22. His Honour has correctly apprehended that so far as the [husband’s] case was concerned (and the [wife’s] case was never adopted by the [husband]) there was no relationship between the parties until 2006, well after, on either version, the [husband] had last consulted the wife’s solicitor.
44. In concluding their oral submissions, counsel for the wife submitted that should the decision be finely balanced the husband’s delay in bringing the application be considered.
45. As to the delay it was said by counsel for the husband that the husband’s affidavit filed 16 August 2011 adequately explained the delay. The relevant parts of that affidavit are as follows:
    14. Also in this facsimile Mr Kingston stated that I have known about him acting on [the wife’s] behalf for a period of nineteen (19) months and have not raised my concerns. This is untrue, I only became aware that Mr Kingston was acting on behalf of [the wife] in the primary proceedings when he served [the wife’s] legal documents on me on 9 June 2011. I am now aware that correspondence had been sent from Mr Kingston to my former legal representatives, Bernays Lawyers, but I had not viewed a copy of any such correspondence before 9 June 2011, and I assumed [the wife] was still using her former legal representatives, John Davies and Co Solicitor to represent her.
    15. The reason I have not raised these concerns since I became aware Mr Kingston was acting on behalf of [the wife] is because I simply did not know that anything could be done to stop Mr Kingston from acting. Mr Wilson has since informed me that I can ask Mr Kingston to withdraw from the case and if he does not withdraw from the case I can make an application to have [the wife] cease instructing Mr Kingston as her legal representatives. At the time Mr Wilson informed me of these options I told him I would certainly like to take those steps as I do believe Mr Kingston’s involvement in the primary proceedings has potential to prejudice me.
    16. On my instructions, Mr Wilson wrote to Mr Kinston on 28 July 2011 asking him to “refrain from accepting instructions from [the wife]”. ...
    17. On 28 July 2011, Mr Wilson received a facsimile from Norman and Kingston Solicitors stating that they would not be withdrawing from the “matter”. ...
46. It was said that the wife was reluctant to engage new legal representation due to financial issues. Apparently, the wife has a special costs arrangement with her current solicitors. It was also said that she would have difficulty in instructing new lawyers.
47. Counsel for the husband submitted that on the wife’s own evidence she has some $130,000.00 in equity, an amount sufficient to engage alternate legal representation.
48. In the circumstances of this case any delay on behalf of the husband could not be regarded as material and is explained.

RELEVANT LAW

The test to be applied

49. In McMillan the Full Court made it clear that the “broader approach” is to be applied, at page 87,733 it was said:

To the extent that it is necessary in this case for us to express a concluded view ... we would support the application in this jurisdiction of the approach of Frederico J in Thevenaz (following Mills) which was adopted by Mullane J in Griffis and in Kossatz (and also by Lindenmayer J in the unreported case of Stewart to which we will shortly refer). We would do so for the reasons related to the sensitive nature of the jurisdiction which were referred to by Bryson J in D & J Constructions and by Rourke J in Magro, and indeed also by Wilczek J in the present case.

50. In D & J Constructions Pty Limited v Head (1987) 9 NSW LR 118, referred to by the Full Court in McMillan, Bryson J said at 123:

... It seems natural that a particularly careful view would be taken in family law business, as such litigation tends to be about highly confidential facts and a very wide range of facts and circumstances can conceivably be relevant; the sensitivity which even the most reasonable people feel about such litigation when they are engaged in it calls for careful measures to secure not only that justice is done but also that it is apparent that it is done, an appearance which would not survive any general impression that lawyers can readily change sides.

51. It is of some interest to refer to a single judge decision of Kay J where the facts were similar. In L and L [2003] FamCA 777 the husband asked that the wife be restrained from instructing a firm of solicitors who had acted for him in property settlement proceedings with his former wife some 15 years previously. Similarly to this case, it was submitted that the firm would have knowledge of the husband and his financial position and the husband had written to the wife’s solicitors, informing them of his objection to them continuing to represent the wife.
52. In granting the injunction his Honour said:
    10. My conclusion from McMillan is that the test is indeed a very stringent test, stringent in the sense of not narrow but broad. If a solicitor theoretically is imparted with information that could embarrass the other side, then if the other side is not unreasonably of the view that that information might be used against them, the solicitor ought to be restrained from acting.
    11. It is the application of the test in this case that is of concern to me. The first leg, as I say, is clear. The solicitor has previously acted for the husband 15 years ago. It is extremely doubtful to me that there is likely to be any information that could possibly be in conflict, but that is not the test.
    12. I do not have the expressed belief that the information may be used to a disadvantage other than by necessary implication from the very fact that these proceedings were occurring and that the letter came fairly rapidly from the husband’s solicitors.
    13. Given the strict nature of the test that has arisen in McMillan’s case, I think that it is better to err on the side of caution in these proceedings and, as regrettable as it may seem to the wife in the proceedings, I think the injunction must flow. I propose to grant the application and restrain the wife’s solicitors from further acting in these proceedings.
53. The application of the test to the circumstances of this case requires the same result. It is important to emphasise, as did Kay J, that the order which should be made against the wife is not based on a possible conflict of interest but rather the possibility of a disadvantage to the husband because of the holding of confidential information and the relationship between solicitor and client.

CONCLUSION

54. The Federal Magistrate misunderstood the application and additionally applied the wrong test. Had the Federal Magistrate applied the correct test to the facts he would have inevitably granted the application. The appeal should be allowed.
55. The wife asked that should the appeal be allowed the discretion be re-exercised and that no further evidence by adduced.
56. It was not suggested by either party that the application should be remitted for re-hearing. The order sought by the husband should be made.

COSTS

57. At the conclusion of the appeal submissions as to costs were heard.
58. Should the appeal be allowed the husband asked that a costs order be made against the wife, who would have been wholly unsuccessful in the appeal. It was said that the wife is employed and owns property in which she has equity. In the alternative the husband asked for a cost certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth).
59. The wife asked, in the event that the appeal be allowed, that costs certificates be granted to both parties. Counsel resisted a costs order against the wife, as the wife’s resistance to the appeal was said not to be wilful or improper. Further, it was said that given there has been no Full Court determination of whether the narrow or broad test should be used in such cases, no costs order against the wife should be made. This submission is incorrect, having regard to the decision of the Full Court in McMillan.
60. In the notice of appeal it was also asked that orders in relation to the costs of the hearing before the Federal Magistrate be determined. Those costs were reserved by the Federal Magistrate and should be determined by him should the parties seek orders in the light of this decision.
61. The appeal has succeeded on a matter of law. Although the wife sought to maintain the order of the Federal Magistrate and ordinarily should pay the husband’s costs it is more appropriate that the husband receive a costs certificate. Such a certificate should not be granted to the wife.

I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of the Honourable Justice May delivered on 23 January 2012.

Associate:

Date: 23 January 2012