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

The question as to whether it is competent for the Municipal Corporation to insist on production of TSLR Certificate and “No Objection Certificate” from revenue authority is no longer res integra. In Hyderabad Potteries Private Limited Vs. Collector, Hyderabad[1], this Court dealt with that very question and held that a local authority cannot insist on production of TSLR Certificate and “No Objection Certificate” from the revenue authority.

IN THE HIGH COURT JUDICATURE, ANDHRA PRADESH

AT HYDERABAD

FRIDAY, THE SECOND DAY OF MARCH

TWO THOUSAND AND TWELVE

PRESENT

THE HONOURABLE SRI JUSTICE G.CHANDRAIAH

W.P. No.5843 of 2012

Between:

Gumma Jagannadha Rao

                                                                   …       Petitioner

And

The Greater Hyderabad Municipal Corporation,

Rep.by its Chief Commissioner,

Tank Bund Road, Hyderabad and another.

                                                                   …       Respondents

THE HONOURABLE SRI JUSTICE G.CHANDRAIAH

W.P. No.5843 of 2012

ORDER:                                                

          The petitioner intended to make construction of a residential house on house bearing H.No.12-10-664/A, on Plot No.14/A, in Survey No.167/1, situated at IndiraNagar Colony, Zamisthanpur, Sitafalmandi, Secunderabad.  For that purpose, the petitioner approached the respondents with an application seeking building permission for construction in the said property.  The grievance of the petitioner is that the respondents are not receiving the application, on the ground that his application was not accompanied with TSLR Certificate and “No Objection Certificate” from the revenue authority.  Therefore, he seeks appropriate directions in this regard.

          The learned counsel for the petitioner placed a copy of the order dated 07.02.2012 passed in W.P. No.3010 of 2012 by this Court and submitted that this matter is squarely covered with the said order.  Therefore, he requested to pass similar order for which, the learned standing counsel does not dispute the same.

          Heard the learned counsel for the petitioner and the learned standing counsel for the respondents and perused the material on record.

          The question as to whether it is competent for the Municipal Corporation to insist on production of TSLR Certificate and
“No Objection Certificate” from revenue authority is no longer
res integra.  In Hyderabad Potteries Private Limited Vs. Collector, Hyderabad[1], this Court dealt with that very question and held that a local authority cannot insist on production of TSLR Certificate and “No Objection Certificate” from the revenue authority.

          Since the subject matter of this writ petition is squarely covered by the said order, following the same, this writ petition is also disposed of, in terms of the said order directing the respondents to receive and process the application of the petitioner for building permission, in accordance with the provisions of the HyderabadMunicipal Corporation Act, 1955  and the Building Rules and Regulations made thereunder, without insisting on production of TSLR Certificate and “No Objection Certificate” from the revenue authority. 

With the above direction, this writ petitioner is disposed of. 
There shall be no order as to costs.

_________________________

JUSTICE G.CHANDRAIAH

Date: 02.03.2012

LSK

---

[1] 2001(3) ALT 200

The petitioner by the time of filing of the Writ Petition was in IV year 1st semester B.Tech (Bio-technology) course studying in the 2nd respondent's college i.e. Sreenidhi Institute of Science and Technology, Ghatkesar, Hyderabad, which is affiliated to 1st respondent University. She was not allowed to take IV year 1st semester examinations scheduled from 08.11.2010, on the ground that she was not having required percentage of attendance. Questioning the same, the petitioner approached this Court with this Writ Petition under Article 226 of the Constitution of In

THE HON'BLE SRI JUSTICE SAMUDRALA GOVINDARAJULU            

WRIT PETITION No.27426 of 2010  

20.01.2012

Ms.Udari Lata Maisaiah

The Jawaharlal Nehru Technological University & another

Counsel for the Petitioner: Sri Parsa Anantha Nageswara Rao

Counsel for Respondent No.1: K.Rathanga Pani Reddy  

^Counsel for Respondent No.2: Mohan Vinod & Associates  

? Cases referred:
2008 (2) ALT 529 (D.B.)

ORDER:

The petitioner by the time of filing of the Writ Petition was in IV year 1st
semester B.Tech (Bio-technology) course studying in the 2nd respondent's college
i.e. Sreenidhi Institute of Science and Technology, Ghatkesar, Hyderabad, which
is affiliated to 1st respondent University.  She was not allowed to take IV year
1st semester examinations scheduled from 08.11.2010, on the ground that she was
not having required percentage of attendance.  Questioning the same, the
petitioner approached this Court with this Writ Petition under Article 226 of
the Constitution of India seeking 'Writ of Mandamus.' At the outset, Sri L.Ravi
Chander, advocate who submitted arguments on behalf of the petitioner, fairly
conceded that in case the petitioner did not have 65% of attendance, then she is
not eligible for appearing for the examinations and that the petitioner has no
remedy before this Court.
2.      The 1st respondent's counsel placed reliance on B.Yugandhar Vs. Principal,
Kuppam Engineering College, Kuppam, Chittoor District1 of this Court, wherein
Division Bench of this Court while confirming order passed by Single Judge of
this Court in a Writ Petition held that no direction can be given to the
University to violate mandate of academic regulations on a plea of sympathy.
Therefore, it has to be seen whether the petitioner's case falls within academic
regulations of the University for the course.

3.      Academic regulations of Bio Medical Engineering for B.Tech 4 year degree
course of the 1st respondent University prescribe regulations regarding
attendance to the following effect:
"6.     Attendance:

(i) A student has to put in a minimum of 75% of attendance in aggregate of all
the subjects for acquiring credits in the I year and/or each semester
thereafter.
(ii) Condonation of shortage of attendance in aggregate upto 10% (65% and above
and below 75%) in each semester or I year may     be granted by the college
academic committee.
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
(vi) Condonation of shortage of attendance as stipulated in 6(ii) above shall be
granted on genuine and valid grounds with supporting evidence."

4.      It is contended for the petitioner that the petitioner did project work
from 10.06.2010 to 30.07.2010 in Centre for Liver Research and Diagnostics and
that if the said period is taken into account as attendance, since doing mini
project work is part of academic regulations of the course, then the petitioner
will fall within regulation 6(ii) of the above regulations.

5.      As per contention of the petitioner in the affidavit filed in support of
this petition, the petitioner had put up 52.95% of attendance.  But, the 1st
respondent in the counter averred that the petitioner was having 62% of
attendance for that semester in question.  It is stated by the Standing Counsel
for the 1st respondent that if presumptive attendance is given for the candidate
for preparation holidays, etc., then  total percentage of the petitioner's
attendance comes to 62%.  Since the percentage of attendance given by the 1st
respondent is beneficial to the petitioner, the petitioner's attendance is taken
as 62% during the relevant semester.

6.      In Para 3 of the affidavit filed in support of this petition, it is
pleaded by the petitioner that she completed her project work in Owaisi Hospital
for the duration of 01.06.2010 to 11.07.2010.  Contrary to the said averment in
the petitioner's affidavit, certificate is filed by the petitioner from
Scientist and Lab Supervisor of Centre for Liver Research and Diagnostics, to
the effect that the petitioner completed the project work at that center and
Allied Hospitals in Kanchanbagh, Hyderabad, under his guidance and supervision
from 10.06.2010 to 30.07.2010.  The said certificate is filed along with
W.P.M.P.No.22589 of 2011 in this Writ Petition.  It is evident that the
petitioner is going on changing her stand from stage to stage and going on
giving dates of her choice which are suitable to her case.  Inspite of filing
the said certificate, it is not the petitioner's allegation in any affidavit
that she did project work from 10.06.2010 to 30.07.2010.  To repeat, as per Para
3 of the affidavit filed in support of this Writ Petition, she did  project work
and completed the same during the period from 01.06.2010 to 11.07.2010.  The
period of 01.06.2010 to 11.07.2010 falls within summer vacation.  Any alleged
project work stated to have been done by the petitioner during summer vacation
cannot be taken into consideration for reckoning attendance to classes.
According to the petitioner, as alleged in Para 4 of the affidavit filed in
support of the Writ Petition, she was suffering from viral fever from 12.07.2010
to 31.07.2010.  It is contended for the petitioner that in case it is relegated
to the academic counsel of the 1st respondent-University to consider whether the
period from 12.07.2010 to 31.07.2010 has to be reckoned as attendance to the
classes, then it will help the petitioner in case the said period is reckoned as
attendance to classes.  As per Regulation 6(vi), the University has power to
condone shortage of attendance as stipulated in Regulation 6(ii) for genuine and
valid grounds with supporting evidence.  Condonation of shortage of attendance
as per Regulation 6(ii) arises only to the extent of aggregate upto 10% i.e. 65%
and above and below 75%.  In this case, the petitioner as per her case was
having 52.95% of attendance and as per the 1st respondent's case was having 62%
of attendance.  In any event, Regulation 6(vi) cannot be invoked either by the
petitioner or by the University authorities for condonation of attendance, since
the petitioner's attendance is admittedly below 65%.  Therefore, both on facts
as well as on Rule position, the 1st respondent has no jurisdiction to consider
condonation of attendance of the petitioner; and the question of relegating the
decision to the University authorities in this case will not arise.  In the
circumstances, the petitioner has no right and is not eligible for attending IV
year 1st semester examinations of B.Tech course.

7.      Accordingly, the Writ Petition is dismissed.  No costs.
______________________________    
JUSTICE SAMUDRALA GOVINDARAJULU          
Dt:20.01.2012

Their lordships of Apex court set aside the lower court orders “Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. The Court further has to satisfy that non-interference by the Court would result in “irreparable injury” to the party seeking relief and that there is no other remedy available to the party except one to grant injunction and he needs protection from the consequences of apprehended injury or dispossession. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely, one that cannot be adequately compensated by way of damages.” In a suit for specific performance of contract of Agencies in alter native for damages, no interim injunction

                                                                  Reportable

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                     CIVIL APPEAL Nos. 4313-4314 OF 2012
              (Arising out of SLP (C) Nos. 34627-34628 OF 2010)

M/s Best Sellers Retail (India) Pvt. Ltd.              … Appellant

                                   Versus

M/s Aditya Birla Nuvo Ltd. & Ors.                … Respondents

                                    WITH

                        CIVIL APPEAL No. 4315 OF 2012
                 (Arising out of SLP (C) No. 34839 OF 2010)

A.C. Thirumalaraj                                              … Appellant

                                   Versus

M/s Aditya Birla Nuvo Ltd. & Ors.                … Respondents



                               J U D G M E N T

A. K. PATNAIK, J.


      Leave granted.



2.    These are appeals by way of special leave under  Article  136  of  the
Constitution of India against the judgment and  order  dated  25.08.2010  of
the High Court of Karnataka in MFA No.4060 of 2010 and in  M.C.  No12036  of
2010 and in M.C. No.12036 of 2010.

3.     The  relevant  facts  briefly  are  that  Aditya  Birla  Nuvo   Ltd.,
respondent no.1 in both the appeals, filed  a  suit  O.S.  No.1533  of  2010
against Liberty Agencies, a partnership firm and its partners, in the  Court
of the City Civil Judge at Bangalore.   The case of the respondent  no.1  in
the plaint was as follows: The respondent no.1 was engaged in  the  business
of readymade garments and accessories under various reputed brand names  and
in the year 1995 had appointed Liberty Agencies as an agent to  conduct  its
business of readymade garments and accessories with the reputed  brand  name
‘Louis Philippe’.  Thereafter, on 02.03.2005 respondent no.1 entered into  a
fresh agreement with Liberty Agencies under which  Liberty  Agencies  agreed
to sell the products of the respondent no.1 in the  suit  schedule  property
and also agreed to retain the  possession  of  the  suit  schedule  property
until the expiry of the term of agreement and Liberty Agencies  was  not  to
sell any other articles or goods other than that supplied by the  respondent
no.1.  Under the agreement dated 02.03.2005  (for  short  ‘the  agreement’),
Liberty Agencies was entitled to a fixed  commission  of  Rs.7,50,000/-  per
month and by an addendum dated 01.07.2008 the fixed  commission  payable  to
Liberty  Agencies  was  increased   to   Rs.9,62,500/-.    Thereafter,   the
respondent no.1 notified to Liberty Agencies various breaches of  the  terms
and conditions of the agreement but Liberty Agencies did not set  right  the
breaches.  As a result, the respondent no.1 suffered huge financial  losses.
 The respondent no.1 issued  a  legal  notice  on  06.02.2010  calling  upon
Liberty Agencies to  comply  with  the  terms  of  the  agreement.   Liberty
Agencies,  however,  sent  a  letter  dated  26.02.2010  claiming  that  the
constitution of the partnership firm has changed and that its  partner  A.C.
Thirumalaraj had retired and that A.C. Thirumalaraj  as  the  owner  of  the
suit schedule property had terminated  the  tenancy  of  the  suit  schedule
property in favour of Liberty Agencies and initiated  a  collusive  eviction
proceeding with an intention to defeat the claim  of  the  respondent  no.1.
The respondent no.1 thus prayed for specific performance  of  the  agreement
and in the alternative for damages for  expenses  and  losses  amounting  to
Rs.20,12,44,398/- if the specific performance of the agreement  was  refused
by the Court.

4.    Along with the suit, respondent no.1 also filed an  application  under
Order 39 Rules 1 and 2 read with Section 151 of the Code of Civil  Procedure
(for short ‘the CPC’) praying for a  temporary  injunction  restraining  the
defendants from leasing, sub-leasing, alienating  or  encumbering  the  suit
schedule property in any manner  pending  disposal  of  the  suit.   Liberty
Agencies and A.C. Thirumalaraj filed their  objections  to  the  application
for temporary injunction and stated, inter alia  in  their  objections  that
the possession of the suit schedule property  had  been  delivered  to  Best
Sellers Retail (I) Pvt. Ltd.  The Additional  City  Civil  Judge  heard  the
parties and by order dated 24.04.2010 allowed the application for  temporary
injunction and restrained Liberty Agencies and its partners  including  A.C.
Thirumalaraj from leasing, sub-leasing, alienating or encumbering  the  suit
schedule property in any manner pending disposal of the suit.

5.    Aggrieved, A.C. Thirumalaraj filed a Miscellaneous Appeal under  Order
43 Rule 1 of the CPC against the order of temporary  injunction  before  the
High Court.  While the Miscellaneous Appeal was pending, it was  brought  to
the notice of the High Court in I.A. No.1 of  2010  that  in  spite  of  the
temporary  injunction  granted  in  favour  of  the  respondent  no.1,  A.C.
Thirumalaraj and Best Sellers Retail (I) Pvt. Ltd., were opening a  shop  in
the suit schedule property in the name of ‘Jack & Jones’  and  by  an  order
dated 16.07.2010 the High Court restrained Best Sellers (I) Pvt.  Ltd.  from
carrying on business in the suit schedule property until further  orders  of
the  High  Court.   Best  Sellers  Retail  (I)  Pvt.  Ltd.  then  filed   an
application M.C. No.12036 of 2010  for  vacating  the  interim  order  dated
16.07.2010.  By the impugned judgment, however,  the  High  Court  dismissed
the Miscellaneous Appeal and rejected the appeal for  vacating  the  interim
order but directed the respondent no.1 to give an undertaking to  the  trial
court that in case respondent no.1 fails in the  suit,  it  will  compensate
the loss to A.C. Thirumalaraj and Best Sellers Retail (I) Pvt. Ltd. for  not
using the suit schedule property.  Aggrieved,  A.C.  Thirumalaraj  and  Best
Sellers (I) Pvt. Ltd. have filed these Civil Appeals.

6.     Mr.  Altaf  Ahmed  and  Mr.  A.K.  Ganguly,  learned  senior  counsel
appearing for the two appellants, submitted relying on the decision of  this
Court in Kishoresinh Ratansinh Jadeja v. Maruti Corporation &  Ors.  [(2009)
11 SCC 229] that while passing an order of temporary injunction under  Order
39 Rules 1 and 2 CPC, the Court is to consider  (i)  whether  the  plaintiff
has a prima facie case; (ii) whether balance of convenience is in favour  of
the plaintiff; and (iii) whether the plaintiff will suffer irreparable  loss
and injury if an order of injunction was not passed.   They  submitted  that
the respondent no.1 itself  has  claimed  damages  of  Rs.20,12,44,398/-  as
alternative relief in the event the suit for  specific  performance  of  the
contract is not decreed.  They argued that as the plaintiff itself had  made
a claim for  damages  for  the  alleged  breach  of  the  agreement  by  the
defendants, the Court should not have granted the  temporary  injunction  in
favour of the plaintiff.

7.    Learned counsel for the  appellants  further  submitted  that  Section
14(1) of the Specific Relief  Act,  1963  provides  in  clause  (b)  that  a
contract which runs into such minute or numerous  details  or  which  is  so
dependent on the personal qualifications or  volition  of  the  parties,  or
otherwise from its nature is such, that the court  cannot  enforce  specific
performance of its material terms, such a contract  cannot  be  specifically
enforced.  They  submitted  that  similarly  Section  14(1)  in  clause  (d)
provides that a contract, the performance which involves the performance  of
a continuous duty which the court cannot  supervise,  is  a  contract  which
cannot be specifically enforced.  They submitted that the agreement  between
Liberty Agencies and respondent no.1 is a contract of agency and is  covered
under clauses (b) and (d) of Section 14(1) of the Specific Relief Act,  1963
and is one which cannot  be  specifically  enforced.   They  submitted  that
Section 14(1) of the  Specific  Relief  Act,  1963  in  clause  (c)  further
provides that a contract which is  in  its  nature  determinable  cannot  be
specifically enforced.  They argued that on completion  of  six  years  from
the date of the agreement, Liberty Agencies could  terminate  the  agreement
and the six years period had expired in the year 2011 and  hence  the  Court
cannot specifically enforce the contract.  They submitted  that  Section  41
(e) of the Specific Relief Act, 1963 clearly  provides  that  an  injunction
cannot be granted to prevent breach of a contract, the performance of  which
would not be enforced.

8.    Learned counsel for the appellants cited the decision  in  Indian  Oil
Corporation Ltd. v. Amritsar Gas Service & Ors. [(1991) 1 SCC 533] in  which
this Court has held that a contract which  is  in  its  nature  determinable
cannot be enforced by the Court.  They also cited the  decision  in  Percept
D’Mark (India) (P) Ltd. v. Zaheer Khan & Anr. [(2006) 4 SCC  227]  in  which
this Court has held relying on the judgment  of  the  Chancery  Division  in
Page One Records Ltd. v. Britton [(1968) 1 WLR 157: (1967) 3  All  ER  822],
that where the totality of the obligations between the parties give rise  to
a fiduciary  relationship  injunction  would  not  be  granted  because  the
performance  of  the  duties  imposed  on  the  party   in   the   fiduciary
relationship could not be enforced at the instance of the other party.

9.     Learned  counsel  for  the  appellants  further  submitted  that  the
agreement between Liberty Agencies and the respondent  no.1  was  an  agency
agreement and it  did  not  create  any  interest  whatsoever  in  the  suit
schedule property and, therefore, the respondent no.1 was  not  entitled  to
any injunction restraining the owner of  the  suit  schedule  property  from
dealing with the property in any manner with a third party.  They  submitted
that  in  any  case  since  the  defendants  had  clearly  stated  in  their
objections to the application for temporary injunction  that  possession  of
the suit schedule property had already been  delivered  to  a  third  party,
Best Sellers Retail (I) Pvt. Ltd., the trial court should not  have  granted
any injunction without the third  party  being  impleaded  as  a  defendant.
Learned counsel for the appellants submitted that the interest of the  third
party has been totally ignored by the trial court and  the  High  Court  and
this is a fit case in which the order of temporary injunction should be  set
aside.

10.   Mr.  K.  K.  Venugopal,  learned  senior  counsel  appearing  for  the
respondent no.1, on other hand, submitted  that  under  clause  B-2  of  the
agreement, Liberty Agencies had given a  warranty  that  the  suit  schedule
property is owned by it and that it  will  retain  possession  of  the  suit
schedule property until the expiry of  the  agreement.   He  submitted  that
under clause D of the agreement the duration of  the  agreement  was  for  a
period of twelve years from the date of the agreement and  this  period  was
to expire in 2017 and, therefore, it is not correct, as has  been  contended
by the learned counsel for the appellants, that the period of the  agreement
has expired.  He argued that under clause E-2  of  the  agreement  only  the
respondent no.1 company had the right to terminate the agreement  by  giving
a written notice of not less than three months after the end  of  six  years
from the date of the agreement and hence Liberty Agencies had  no  right  to
terminate the agreement.  He submitted that no  contention  can,  therefore,
be raised on behalf of Liberty Agencies that the contract  was  determinable
in nature or that the contract had expired.

11.    In reply to the contention that under Section  14(1)(b)  and  (d)  of
the  Specific  Relief  Act,  1963  the  agreement  cannot  be   specifically
enforced, Mr. Venugopal cited  Bowstead  and  Reynolds  on  Agency  for  the
proposition that in exceptional cases specific performance of a contract  of
agency can also be decreed by the Court.  He argued that Section 42  of  the
Specific Relief Act, 1963 makes it abundantly clear that  where  a  contract
comprises an affirmative agreement to do  a  certain  act,  coupled  with  a
negative agreement, express or  implead,  not  to  do  a  certain  act,  the
circumstances that the court is unable to  compel  specific  performance  of
the affirmative agreement shall not preclude it from granting an  injunction
to perform the negative agreement.   He  also  cited  the  decision  of  the
Chancery Division in Donnell v. Bennett reported in 22 Ch.D.  835  where  it
has been held that where there is a negative clause in  the  agreement,  the
Court has to enforce it without regard to the question of  whether  specific
performance could be granted of the entire contract.  He referred to  clause
B-5 of the agreement which provides that Liberty Agencies  shall  only  sell
the products supplied by the respondent no.1 company and shall not sell  any
other articles/products manufactured by  any  other  person/Company/Firm  in
the premises during the period of  the  agreement  unless  approved  by  the
respondent no.1 company.  He submitted that this is not  a  case  where  the
appellants are entitled to any relief from this Court under Article  136  of
the Constitution of India.

12.    It is not necessary for us to deal with the  contentions  of  learned
counsel for the parties based on the provisions of Sections 14,  41  and  42
of the Specific Relief Act, 1963 because Section 37 of the  said  Act  makes
it clear that temporary injunctions are to be regulated by the CPC  and  not
by  the  provisions  of  the  Specific  Relief  Act,  1963.   In  fact,  the
application for temporary injunction of respondent  no.1  before  the  trial
court is under the provisions of Order 39 Rules 1 and 2  read  with  Section
151 of the CPC.  It has been held by this  Court  in  Kishoresinh  Ratansinh
Jadeja v. Maruti Corporation & Ors. (supra)  that  it  is  well  established
that while passing an interim order of injunction under  Order  39  Rules  1
and 2 CPC, the Court is required to consider (i) whether there  is  a  prima
facie case  in  favour  of  the  plaintiff;  (ii)  whether  the  balance  of
convenience is in favour of passing  the  order  of  injunction;  and  (iii)
whether the  plaintiff  will  suffer  irreparable  injury  if  an  order  of
injunction would not be passed as  prayed  for.   Hence,  we  only  have  to
consider  whether  these  well-settled  principles  relating  to  grant   of
temporary injunction have been kept in mind by the trial court and the  High
Court.

13.    On a reading of clause B-2 of the agreement,  we  find  that  Liberty
Agencies had given a warranty that the suit schedule property was  owned  by
it and that it will retain the possession  of  the  suit  schedule  property
until the expiry of the  agreement.   Clause  D  of  the  agreement  clearly
stipulated that the duration of the agreement  shall  be  for  a  period  of
twelve years from the date of the agreement unless terminated in  accordance
with the provisions of the agreement.   Clause  E-2  further  provides  that
respondent no.1 and not Liberty Agencies could terminate  the  agreement  by
giving a notice of not less than three months after the  end  of  six  years
from the date of the agreement and respondent no.1 had  not  terminated  the
agreement under this clause.  Before the expiry of six years from  the  date
of the agreement, Liberty Agencies sent the letter dated 26.02.2010  to  the
respondent No.1 committing a breach of clause B-2  of  the  agreement  which
provided that Liberty Agencies will retain possession of the  suit  schedule
property until the expiry of the agreement.  This  was  the  breach  of  the
agreement which was sought to be prevented by the trial court  by  an  order
of temporary injunction.  The trial court  and  the  High  Court  were  thus
right in coming to the conclusion that  the  respondent  no.1  had  a  prima
facie case.

14.    Yet, the settled principle of law is  that  even  where  prima  facie
case is in  favour  of  the  plaintiff,  the  Court  will  refuse  temporary
injunction if the injury suffered by the plaintiff on account of refusal  of
temporary injunction was  not  irreparable.   In  Dalpat  Kumar  &  Anr.  v.
Prahlad Singh & Ors. [(1992) 1 SCC 719] this Court held:

      “Satisfaction that there is a  prima  facie  case  by  itself  is  not
      sufficient to grant injunction.  The Court further has to satisfy that
      non-interference by the Court would result in “irreparable injury”  to
      the party seeking relief and that there is no other  remedy  available
      to the party except one to grant injunction and  he  needs  protection
      from  the  consequences  of  apprehended  injury   or   dispossession.
      Irreparable injury, however, does not  mean  that  there  must  be  no
      physical possibility of repairing the injury, but means only that  the
      injury must be a material one, namely, one that cannot  be  adequately
      compensated by way of damages.”


15.    In the present case, the respondent no.1 itself had  claimed  in  the
plaint the alternative relief of damages to the  tune  of  Rs.20,12,44,398/-
if the relief for specific performance was to be refused by  the  Court  and
break-up of the damages of Rs.20,12,44,398/- claimed in the  plaint  was  as
follows:

       “I.  Net Book stock amount on 28.02.2010 is Rs.1,15,97,638/-.


         II. Loan amount due as on 27.01.2010 is     Rs.44,81,584/-.


        III. Amount due as per Statement of Accounts as  on  28.02.2010  is
             Rs.20,65,176/-.


         IV. Projected Loss of profit on sales, for the balance 7 year term
             of the Agency Agreement amounts to a sum of Rs.10,31,00,000/-.


          V. Loss of Goodwill,  Reputation  including     amount  spent  on
             advertisement Rs.2,00,00,000/-.


         VI. Loss of amount which Plaintiff would incur for relocating  the
             store to other place in the Brigade  Road,  Bangalore  and  to
             continue its business for rest  of  the  term  7  years  would
             amount to Rs.6,00,00,000/- along with simple interest  at  the
             rate of 24% p.a. from the date of payment till realization  as
             the same being a commercial transaction.”




    16. Mr. Venugopal, learned counsel appearing for  the  respondent  no.1,
        however, submitted that future profits and loss of goodwill  of  the
        respondent no.1 cannot be calculated in terms of the money, but  the
        aforesaid statement of damages claimed by the respondent no.1 in the
        plaint would show that the respondent no.1 has itself  calculated  a
        projected loss of profit for the balance  seven  year  term  of  the
        agreement  as  Rs.10,31,00,000/-  and  has  also  assessed  loss  of
        goodwill at Rs.2,00,00,000/- besides the loss of Rs.6,00,00,000/- in
        relocating the store to another place in Brigade Road, Bangalore.

    17.  Despite this claim towards damages made by the respondent  no.1  in
        the  plaint,  the  trial  court  has  held  that  if  the  temporary
        injunction as sought for is not granted, Liberty Agencies may  lease
        or sub-lease the  suit  schedule  property  or  create  third  party
        interest over  the  same  and  in  such  an  event,  there  will  be
        multiplicity of proceedings and thereby the respondent no.1 will  be
        put to hardship and mental agony, which  cannot  be  compensated  in
        terms of money.  Respondent no.1 is a limited  company  carrying  on
        the business of readymade garments and we fail  to  appreciate  what
        mental agony and hardship it will suffer  except  financial  losses.
        The High Court has similarly held in the impugned judgment  that  if
        the premises is let out, the respondent no.1 will be put to hardship
        and the relief claimed would be frustrated  and,  therefore,  it  is
        proper to grant injunction and the trial court has  rightly  granted
        injunction  restraining  the  partners  of  Liberty  Agencies   from
        alienating, leasing, sub-leasing or encumbering  the  property  till
        the disposal of the suit.  The High Court lost  sight  of  the  fact
        that if the temporary injunction restraining  Liberty  Agencies  and
        its partners from allowing, leasing, sub-leasing or encumbering  the
        suit schedule property was not  granted,  and  the  respondent  no.1
        ultimately succeeded in the suit, it would be  entitled  to  damages
        claimed and proved before the court.  In other words, the respondent
        no.1 will not suffer irreparable injury.   To  quote  the  words  of
        Alderson, B. in The  Attorney-General  vs.  Hallett  [153  ER  1316:
        (1857) 16 M. & W.569]:
      “I take the meaning of irreparable injury to be  that  which,  if  not
      prevented by injunction,  cannot  be  afterwards  compensated  by  any
      decree which the Court can pronounce in the result of the cause.”



    18. For the aforesaid reasons, we  set  aside  the  order  of  temporary
        injunction passed by  the  trial  court  as  well  as  the  impugned
        judgment and the order dated 16.07.2010 of  the  High  Court.    The
        appeals are allowed with no order as to costs.

                                                               .……………………….J.
                                                           (A. K. Patnaik)


                                                               ………………………..J.
                                                           (Swatanter
Kumar)
New Delhi,
May 08, 2012.
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