N4589 

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 2 OF 2008

BETWEEN:

BRITISH AMERICAN TOBACCO
(PNG) LIMITED for itself and on
behalf of BRITISH AMERICAN
TOBACCO AUSTRALIA
SERVICES LIMITED
Plaintiff

AND:

TST 4 MILE LTD
Defendant

Waigani: Hartshorn J.
2011: 1st August
: 8th November

Application to restrain lawyers from acting for the plaintiff

Facts:

The plaintiff (BAT) seeks declaratory and injunctive relief against the defendant (TST) in relation to counterfeit "Pall Mall" cigarettes that were seized by Papua New Guinea Customs in September 2007. TST now applies for Blake Dawson, the lawyers for BAT, to be prevented from acting for BAT in this proceeding. TST contends that Blake Dawson is in possession of confidential information of TST and that there is an inference that Blake Dawson may have disclosed that information to BAT

Held:

1. As to the protection of TST's confidence's, it is incumbent on TST to establish that Blake Dawson is in possession of information which is confidential to TST and to the disclosure of which TST has not consented, and that the information is or may be relevant to the new matter in which the interest of BAT is or may be adverse to that of TST.

2. It has not been established that Blake Dawson disclosed confidential information or that the assumption underlying the inference can be made, that Blake Dawson had in fact received confidential information. 

Cases cited:

Papua New Guinea Cases 

Pangia Constructions v. PNGBC [1996] PNGLR 1 
Aerato Security Services v. MVIT (1998) N1793
Kelleney David Elisha v. Post PNG (1999) N1866
John Bangkok v. Ray Sena (2006) N3037
Yama v. PNGBC (2008) SC922

Overseas Cases

Prince Jefri Bolkiah v. KPMG (A Firm) [1999] 2 AC 222 
Bureau Interprofessionnel Des Vins De Bourgogne v. Red Earth Nominees Pty Ltd [2002] FCA 588 
Kallinicos & Anor v. Hunt & Anor [2005] NSWSC 1181 
British Sky Broadcasting Group PLC & Anor v. Virgin Media Communications Ltd & Ors [2008] EW CA Civ 612 
Winters v. Mischcon De Reya [2008] EWHC 2419
Worth Recycling Pty Ltd v. Waste Recycling and Processing Pty Ltd [2009] NSWCA 354
Cleveland Investments Global Ltd v. Evans [2010] NSWSC 567
Fakhrabadi and Ashrafinia [2011] NSWSC 697
Meat Corporation of Namibia v. Dawn Meats (UK) Ltd [2011] EWHC 474

Counsel:

Mr. D. Wood, for the Plaintiff
Mr. J. Brooks, for the Defendant

8th November, 2011

1. HARTSHORN J: By originating summons the plaintiff (BAT) seeks declaratory and injunctive relief against the defendant (TST) in relation to counterfeit "Pall Mall" cigarettes that were seized by Papua New Guinea Customs in September 2007.

2. TST now seeks an order that BAT's lawyers Blake Dawson, be prevented from acting for BAT in this proceeding. TST contends that Blake Dawson is in possession of confidential information of TST and that there is an inference that Blake Dawson may have disclosed that information to BAT. TST submits that its confidential information was acquired when a partner of Blake Dawson gave advice to TST on a matter that TST contends is related to issues that are the subject of this proceeding.

3. BAT opposes the application and submits that there is no conflict of interest in Blake Dawson continuing to act for BAT in this proceeding, that no confidential information was acquired from TST, that if it was, it was not disclosed to other lawyers in Blake Dawson and was not disclosed by Blake Dawson to BAT, and in any event no prejudice has been caused to TST.

Background

4. Mr. Bill Jackson, the company secretary of TST, deposes that in early December 2007, he telephoned Mr. Ian Shepherd of Blake Dawson. He expressed to Mr. Shepherd his concerns about the rumoured involvement of Mr. Neville Seeto, the then manager of TST, with the importation of alleged counterfeit cigarettes and how this was damaging to TST's reputation and the business operations of the entire Tan Group. Mr. Jackson deposes that he discussed the matter generally with Mr. Shepherd and also discussed his suspicions surrounding Mr. Seeto's possible involvement with the counterfeit cigarette importation. Mr. Jackson deposes that he asked Mr. Shepherd whether TST could terminate Mr. Seeto's employment in the absence of any evidence linking Mr. Seeto to the importation of the cigarettes even though there was suspicion surrounding Mr. Seeto's involvement. Mr. Shepherd said that he would draft a letter that could be sent to Mr. Seeto to effect his termination of employment from TST. Mr. Shepherd drafted a proposed letter to be placed on TST's letterhead and faxed it to Mr. Jackson. Relevantly, the draft letter states:

"The reasons for your termination is that you have brought the company into disrepute and have acted contrary to the best interests of the company."

5. Mr. Jackson deposes that ultimately, Mr. Seeto resigned of his own accord and that the letter drafted by Mr. Shepherd was not given to Mr. Seeto.

6. Mr. Jackson deposes that he was surprised to learn that Blake Dawson had been retained to represent BAT in this proceeding. He deposes that he spoke again with Mr. Shepherd generally about the matter after this proceeding was commenced, that doubts remained about Mr. Seeto's involvement, but that TST had no knowledge of the cigarette importation. Mr. Jackson deposes that Mr. Shepherd told him that in Mr. Shepherd's view the matter could probably be resolved without the need to continue with the litigation. As a result, Mr. Jackson sent a letter to Gadens, the lawyers for TST in this proceeding, confirming what Mr. Shepherd and he had discussed.

7. Mr. Shepherd deposes that he is not personally involved in the prosecution of BAT's case in this proceeding, he has no knowledge about the background facts to the case but can recall a brief telephone conversation with Mr. Jackson regarding Mr. Seeto's employment with TST. He deposes that he cannot remember much of what he discussed with Mr. Jackson, but he may have given a brief verbal advice on the phone as to how TST could legally effect Mr. Seeto's termination. The draft letter that he sent to Mr. Jackson appears to be confirmation of the discussion he had with him. The matter was never registered, no file was opened and he did not charge for it. At the time, he was acting for TST in a number of other matters unrelated to this proceeding. Mr. Shepherd deposes that he does not remember discussing the specific reason for Mr. Seeto's termination of employment with Mr. Jackson and he did not know that it had anything to do with this proceeding which was filed after his conversation with Mr. Jackson.

8. Mr. Shepherd deposes that he is unaware whether the draft letter that he prepared was ever sent to Mr. Seeto by Mr. Jackson. Further, he had not told any lawyer at Blake Dawson what he had discussed with Mr. Jackson, until Mr. Ralph Diweni, a lawyer at Blake Dawson, spoke to him about the draft letter that Mr. Diweni had seen. Mr. Diweni had seen the letter prepared by Mr. Shepherd after it had been sent to Blake Dawson by Gadens during discovery. Mr. Shepherd deposes that he does not know the real reason for Mr. Seeto's termination of employment and whether this proceeding has anything to do with it.

Law

9. TST's application is based upon the general provisions of Order 12 Rule 1 National Court Rules and on Rules 9 (3) and 10 (8) Professional Conduct Rules which are as follows:

"9 (3) A lawyer shall not, without the consent of his clients, directly or indirectly-

(a)	reveal the client's confidence; or

(b)	use the client's confidence in any way detrimental to the interests of the client;

 or

(c)	lend or reveal the contents of the papers in any brief, advice or instructions to any person,

except to the extent-

(d)	required by law, rule of court or court order, provided that where there are reasonable grounds for questioning the validity of the law, rule or order he shall first take all reasonable steps to test the validity of the same; or

(e)	necessary for replying to or defending any charge or complaint of criminal or unprofessional conduct or professional misconduct brought against him or his partners, associates or employees or to respond to a requirement under Section 3 (d) and (e).

10 (8)	Where-

(a)	a lawyer has represented a client; or

(b)	because of a lawyer's association with a law firm he has had access to a client's confidences,

that lawyer shall not thereafter use such information against that clients interest or for the benefit of any other person."

10. A preliminary issue, pursuant to a general principle for injunctive relief that a party against whom relief is sought must be a party to the action, is whether the relief sought against Blake Dawson is able to be applied for in this proceeding. BAT does not take issue with the present application being made in this proceeding and I am satisfied that this type of application is considered to be an exception to the general rule. In most jurisdictions including ours, the practice is that such relief is available within the existing proceeding without it being necessary to join the subject lawyers to the proceeding or commencing separate proceedings against the lawyers: Yama v. PNGBC (2008) SC922; Pangia Constructions v. PNGBC [1996] PNGLR 1; Kelleney David Elisha v. Post PNG (1999) N1866; John Bangkok v. Ray Sena (2006) N3037; Aerato Security Services v. MVIT (1998) N1793.

11. As to the law on the disqualification of lawyers acting for former clients in this jurisdiction, counsel for TST submitted that while the case authorities had considered some of the principles developed in other jurisdictions they had not considered more recent overseas developments. Numerous National Court and overseas decisions were brought to the court's attention. Counsel for BAT referred to two National Court decisions and four overseas decisions.

12. Both counsel relied inter alia, upon the decision of Kirriwom J. in John Bangkok v. Ray Sena (2006) N3037. In that decision Kirriwom J. noted the traditional approach citing Gummow J. where his Honour said:

"Reliance has been placed in Australia upon the decision of the English Court of Appeal in Rakusen v Ellis Munday & Clarke (1912) 1 Ch 831, for the proposition that a solicitor is precluded and will be restrained from acting for an opponent of a former client where the solicitor, as the result of having previously acted for the client, obtained confidential information and it reasonably can be anticipated that in the course of acting for the opponent of the former client, the solicitor may consciously or inadvertently make use of that information in breach of his duty to the former client: Vatousios, "Solicitors Acting Against Former Clients", (1983) Victoria Law Institute Journal 976."

13. In Bangkok (supra), Kirriwom J. ordered the lawyers to cease to act. His Honour based his ruling primarily on public interest considerations and the notion that the court can control the conduct of lawyers as officers of the court and hold lawyers to a high standard. I note however, that this case did not consider developments in overseas jurisdictions, principally England and Australia that had already occurred.

14. In the House of Lords case of Prince Jefri Bolkiah v. KPMG (A Firm) [1999] 2 AC 222, Lord Millett, with whom the rest of their Lordships agreed, said, at 235:

"Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.

Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own."

15. Prince Jefri (supra) has been followed and cited with approval in numerous authorities in England and Australia; examples being Bureau Interprofessionnel Des Vins De Bourgogne v. Red Earth Nominees Pty Ltd [2002] FCA 588; Kallinicos & Anor v. Hunt & Anor [2005] NSWSC 1181; British Sky Broadcasting Group PLC & Anor v. Virgin Media Communications Ltd & Ors [2008] EWCA Civ 612; Winters v. Mischcon De Reya [2008] EWHC 2419; Worth Recycling Pty Ltd v. Waste Recycling and Processing Pty Ltd [2009] NSWCA 354; Cleveland Investments Global Ltd v. Evans [2010] NSWSC 567; Meat Corporation of Namibia v. Dawn Meats (UK) Ltd [2011] EWHC 474; and Fakhrabadi and Ashrafinia [2011] NSWSC 697.

16. In Kallinicos (supra), Brereton J., after a comprehensive review of the authorities, articulated the principles to be applied as follows:

"[76] The foregoing authorities establish the following:

•	During the subsistence of a retainer, where the court's intervention to restrain the solicitor from acting for another is sought by an existing client of the solicitor, the foundation of the court's jurisdiction is the fiduciary obligation of a solicitor, and the inescapable conflict of duty which is inherent in the situation of acting for clients with competing interests (Prince Jefri).

•	Once the retainer is at an end, however, the court's jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure) (Prince Jefri).

•	After termination of the retainer, there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court's intervention such duty having come to an end with the retainer (Prince Jefri; Belan v. Casey; PhotoCure; British American Tobacco; Asia Pacific Telecommunications; contra Spincode; McVeigh; Sent).

•	However, the court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice (Everingham v. Ontario; Black v. Taylor; Grimwade v. Meagher; Newman v. Phillips Fox; Mitchell v. Pattern Holdings; Spincode; Holborow; Williamson v. Nilant; Bowen v. Stott; Law Society v. Holt). Prince Jefri does not address this jurisdiction at all. Belan v. Casey and British American Tobacco Australia are not to be read as supposing that Prince Jefri excludes it. Asia Pacific Telecommunications appears to acknowledge its continued existence.

•	The test to be applied in this inherent jurisdiction is whether a fair minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice ( Everingham v. Ontario; Black v. Taylor; Grimwade v. Meagher; Holborow; Bowen v. Stott; Asia Pacific Telecommunications).

•	The jurisdiction is to be regarded as exceptional and is to be exercised with caution (Black v. Taylor; Grimwade v. Meagher; Bowen v. Stott).

•	Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause (Black v. Taylor; Grimwade v. Meagher; Williamson v. Nilant; Bowen v. Stott).

•	The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief (Black v. Taylor; Bowen v. Stott)."

Discussion

17. English and Australian decisions are of persuasive value in this jurisdiction: Schedule 2.12 Constitution. Given the common law jurisdictions and that the practice of law in those countries continues to be similar to ours, I see no reason why the principles identified in Brereton J.'s comprehensive review should not apply in our jurisdiction. I respectfully adopt those principles.

18. Applying those principles; first, as Blake Dawson's retainer to act for TST in relation to Mr. Seeto's employment is at an end, this court's jurisdiction is based on the protection of confidences of TST. 

19. As to the protection of TST's confidence's, pursuant to Prince Jefri (supra), it is incumbent on TST to establish that Blake Dawson is in possession of information which is confidential to TST and to the disclosure of which TST has not consented, and that the information is or may be relevant to the new matter in which the interest of BAT is or may be adverse to that of TST.

20. As to whether TST has established that Blake Dawson is in possession of information which is confidential to TST; TST relies upon the evidence of Mr. Jackson. Mr. Jackson deposes that he communicated his suspicions about Mr. Seeto's involvement in the importation of counterfeit cigarettes to Mr. Shepherd. Mr. Shepherd deposes that he had a brief telephone conversation with Mr. Jackson regarding Mr. Seeto's employment but does not remember having discussed the specific reason for Mr. Seeto's termination of employment. Counsel for TST submits that the wording of the draft letter terminating Mr. Seeto's employment prepared by Mr. Shepherd, that:

"…. you have brought the company into disrepute and have acted contrary to the best interests of the company."

implies that Mr. Shepherd had been appraised of the general facts of the matter as well as the views expressed to him by Mr. Jackson that Mr. Seeto may have been involved in the importation of cigarettes.

21. I am not satisfied that such an implication can be made. The wording of the draft letter could have resulted from a conversation in which Mr. Shepherd was requested to draft such a letter on the basis that TST's interests had been adversely affected by the actions of Mr. Seeto, without there being any reference by Mr. Jackson to the rumoured specific actions of Mr. Seeto in question.

22. It is also submitted that BAT and Mr. Ralph Diweni, proceeded on the basis that Mr. Seeto was terminated from his employment when in fact Mr. Seeto resigned. In the case of Mr. Diweni, TST submits that in support of BAT's application for further discovery, Mr. Diweni deposed that he believed that there were other documents in existence relating to the, "termination" of Mr. Seeto and that this affidavit was sworn before the draft letter prepared by Mr. Shepherd had been discovered by TST. The implication, TST submits, is that the information concerning Mr. Seeto's supposed termination came from the information supplied by Mr. Jackson to Mr. Shepherd and the draft letter prepared by Mr. Shepherd, and therefore that Blake Dawson may have disclosed confidential information.

23. In the affidavit of Mr. Brooks, counsel for TST, there is a letter dated 22nd February 2008 from Gadens to Blake Dawson in which inter alia, it is stated:

"Moreover, TST's action in terminating the former Manager…"

Notwithstanding that Mr. Seeto resigned and was not terminated, as submitted by TST, it is clear that the belief or supposed knowledge of BAT and Mr. Diweni that Mr. Seeto was terminated, could have come from the Gadens letter and not from a disclosure of confidential information.

24. I am not satisfied that the inference can be drawn as submitted, that Blake Dawson disclosed confidential information or that the assumption underlying the inference can be made, that Blake Dawson had in fact received confidential information.

25. In the absence of any other evidence that establishes to my satisfaction that Mr. Shepherd or Blake Dawson are in possession of information which is confidential to TST, TST has failed to establish the first leg of the test enunciated in Prince Jefri (supra). Given this finding, it is not necessary to consider the second leg of that test.

Inherent jurisdiction

26. As to whether Blake Dawson should be restrained pursuant to the inherent jurisdiction of this court, when regard is had to my finding that the evidence does not disclose that any confidential information was given to Blake Dawson, the brief telephone conversation that Mr. Jackson and Mr. Shepherd had, that no file was opened by Mr. Shepherd at Blake Dawson, that Mr. Shepherd cannot remember discussing the specific reasons for the proposed termination of Mr. Seeto's employment, that according to Mr. Jackson he spoke again with Mr. Shepherd on the matter even though Blake Dawson were acting for BAT against TST at that stage, that although Mr. Jackson said he was surprised when he discovered that Blake Dawson was acting for BAT, TST did not object to Blake Dawson so acting, that no objection was expressed by Mr. Jackson or TST to Blake Dawson acting for BAT until over 3 years after this proceeding was commenced, I do not consider that a fair minded reasonably informed member of the public would conclude that the proper administration of justice requires that Blake Dawson be restrained from acting for BAT in this proceeding.

27. In arriving at this conclusion I have also taken into account that the inherent jurisdiction should be exercised only in exceptional circumstances, be exercised with caution and that due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without cause.

Orders

a)	the relief sought in the notice of motion of the defendant filed 1st July 2011 is refused,

b)	the plaintiff's costs of and incidental to the motion shall be paid by the defendant,

c)	time is abridged.

_______________________________________________

Blake Dawson: Lawyer for the Plaintiff 
Gadens Lawyers: Lawyers for the Defendant