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To act or not to act? An update on the case law regarding conflicts of interest

In a previous blog titled “To act or not to act?” we discussed the circumstances in which a Court may make orders restraining a solicitor or member of Counsel from acting on behalf of a client or  Orders restraining a party from engaging a Solicitor or a member of Counsel.

The blog discussed the test applied by the Court, as defined in the case of Thevenaz and Thevenaz (1986) FLC 91-748, which was endorsed as the correct approach by the Full Court of the Family Court in McMillan & McMillan [2000] FLC 93-048. The test being whether there is a theoretical rather than actual risk that either justice might not be done or appear to be done, or that there is a theoretical possibility that confidential information could be used against the client.

Case law had established that given the sensitive nature of family law, it was not necessary nor appropriate for the Court to make a finding that confidential information has or has not been provided- a theoretical possibility was sufficient.

In September 2015 judgement was delivered in the case of Osferatu & Osferatu [2015] FamCAFC 177 by the Full Court of the Family Court of Australia. The case reviewed the law in this area and delivered a decision which ultimately increases the threshold to be met by an applicant seeking to restrain a Solicitor or Barrister such that a theoretical possibility that information could be used against them is no longer sufficient.

The case of Osferatu was an appeal from an injunction restraining the husband’s solicitor from continuing to act for him in proceedings between him and the wife.

The husband’s solicitor (“Mr F”) had been a partner in the firm of the Solicitors acting for the wife. It was common ground Mr F did not have any dealings with the wife while he was a member of the firm instructed by her. Furthermore, Mr F had provided an undertaking to establish and maintain effective information barriers.

At paragraph 34 of the Full Court’s judgment they say, “We agree with Goldberg J in Photocure ASA v Queen’s University at Kingston [2002] FCA 905 where he said at [50] – [51]:

  1. It is apparent from Lord Millett’s judgment that there are three stages which need to be considered:
  • whether the firm is in possession of information which is confidential to the former client;
  • whether that information is, or may be, relevant to a matter in which the firm is proposing to act for another party with an interest adverse to the former client;
  • whether there is any risk that the information will come into the possession of those persons in the firm working for the other party.”

The Full Court go on to explain at paragraph 35 of their judgment that what is needed is , “A balancing of the nature of the information against a consideration of the person to whom the information was given, when the information was given, the relevance of that information to the current proceedings, the risk of disclosure and any proposed protective measures is required before any determination can be made as to whether any relief is required and, if so what is the appropriate relief.”

By applying this three step approach the Full Court has brought the test in family law closer to the test applied in other areas of the law.

By Nicholes Family Lawyers

 

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