Family Court of Australia

DALTON & DALTON	[2017] FamCAFC 78	

FAMILY LAW – APPEAL – Where the primary judge dismissed the husband’s application to restrain the wife’s solicitors from acting – Where the wife’s solicitor’s had previously acted for the husband – Whether an undertaking provided to create an effective information barrier is effective – Waiver – Implied waiver of the right to object – Appeal dismissed – Costs ordered.

FAMILY LAW – APPEAL – LEAVE TO APPEAL –Where there was sufficient doubt about the trial reasons to justify consideration and supposing the decision to be wrong the husband would suffer substantial injustice – Where the proposed appeal raises matters of considerable importance – Leave to appeal granted	

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth) rr 1.05, 13.10, 13.04, Schedule 1 Clause 1(6)(i)	

Asia Pacific Telecommunications Limited v Optus Networks Pty Limited [2007] NSWSC 350	
Billington & Billington (No 2) [2008] FamCA 409	
Expense Reduction Analysts Group Pty Ltd and Ors v Armstrong Strategic Management and Marketing Pty Limited and Ors (2013) 250 CLR 303
Mancini v Mancini [1999] NSWSC 800	
Mann v Carnell (1999) 201 CLR 1	
McMillan and McMillan (2000) FLC 93-048
Osferatu & Osferatu (2015) FLC 93-666	
PhotoCure ASA v Queen’s University at Kingston [2002] FCA 905	

Appellant:	Mr Dalton	

Respondent:	Ms Dalton	

File Number:	NCC	1909		of	2015	

Appeal Number:	EA	54		of	2016	

DATE DELIVERED:	28 April 2017	

Place Delivered:	Brisbane	

Place Heard:	Sydney	

Judgment of:	Ainslie-Wallace, Ryan and Murphy JJ	

Hearing date:	22 June 2016	

Lower court jurisdiction:	Family Court of Australia	

lower court judgment date:	14 March 2016	

LOWER COURT MNC:	[2016] FamCA 174	

REPRESENTATION

COUNSEL FOR THE Appellant:	Mr Richardson SC and Ms Steggall	

SOLICITOR FOR THE Appellant:	Marshall Law	

COUNSEL FOR THE RESPONDENT:	Mr Kearney SC and Mr Tregilgas	

SOLICITOR FOR THE RESPONDENT:	Paton Hooke Lawyers	

Orders
(1)	That the husband’s application for leave to appeal be granted.
(2)	The appeal be dismissed.
(3)	That the husband pay the wife’s costs of and incidental to this appeal within 28 days of agreement as to quantum, and failing agreement, of assessment.
Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE FULL COURT OF THE Family Court of Australia at Sydney	

Appeal Number: EA 54 of 2016
File Number: NCC 1909 of 2015

Mr Dalton 	
Appellant

And

Ms Dalton 	
Respondent

REASONS FOR JUDGMENT
AINSLIE-WALLACE AND RYAN JJ
1.	Mr Dalton, who we will refer to as the husband, seeks leave to appeal against an order made by Austin J on 14 March 2016 dismissing his application to restrain his former solicitors from continuing to act for his estranged wife, Ms Dalton (“the wife”) in their family law proceedings.  Notwithstanding that the husband complained about there being a “conflict of interest” the application was in fact brought to protect confidential information the husband entrusted to his former lawyers from being disclosed to the wife.
2.	The husband and wife married 20 years ago and separated under one roof in December 2014.  In the couple of years leading up to the separation and unbeknownst to the wife, the husband retained Paton Hooke Lawyers (“Paton Hooke”) to advise in relation to his financial affairs and succession planning.  He sought advice regarding a new will, the establishment of a new trust structure for his financial affairs and making inter vivos gifts to the wife and other third parties.  Although the husband predominantly consulted with Mr Marshall of that firm, he and his accountant also consulted Mr Lewers.  At some stage, Mr Marshall left Paton Hooke and established the eponymous Marshall Law.  
3.	Without letting the husband know, in March 2015 the wife sought advice from Paton Hooke in relation to a financial settlement with him.  Mr Paton accepted the wife’s instructions and she became a client of the firm.  Acting for the wife, on 17 July 2015, Paton Hooke filed an application in the Family Court of Australia for interim and final orders as to costs, spousal maintenance, property settlement and injunctions.
4.	Because the wife failed to comply with the Court’s pre-action procedures         (r 1.05 of the Family Law Rules 2004 (Cth) (“the Rules”)), the first the husband knew that Paton Hooke acted for her was when he was served with the wife’s documents on 22 July 2015.  He, in turn, retained Mr Marshall.  
5.	On 3 August 2015, Mr Marshall wrote to Paton Hooke asking they cease to act for the wife.  In this initial letter, it was asserted that Paton Hooke had “a conflict of interest” because the “… firm is privy to confidential information provided by [the husband] to your firm”.  
6.	Under the hand of Mr Paton, on 5 August 2015, Paton Hooke denied there was a conflict of interest in continuing to represent the wife and sought particulars of the husband’s claim that there was.  It is appropriate to record at this stage that on 9 October 2015 Mr Lewers affixed his signature to correspondence about the matter from Paton Hooke to Marshall Law.  Otherwise, it is sufficient to observe that in the months that followed correspondence in relation to the conflict issue and significant steps in the substantive proceedings took place and it was not until 10 December 2015 that the husband filed an application seeking that the wife’s solicitors be restrained from acting on her behalf in the proceedings.  The husband’s application was resisted by the wife and listed for hearing before the primary judge on 11 March 2016.  His Honour delivered oral reasons for judgment on 14 March 2016 and the application was dismissed.
7.	It can be seen that the primary judge applied the principles that emerge from Osferatu & Osferatu (2015) FLC 93-666, a recent case concerned with the risk of the misuse of confidential information, and which the parties agreed (as do we), apply in this case.  Consistent with Osferatu at [34] (where the court agreed with Goldburg J in PhotoCure ASA v Queen’s University at Kingston [2002] FCA 905 at [50]), the primary judge can be seen to consider that the questions to be answered were:
•	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. 
8.	The Full Court in Osferatu at [35] went on to explain that the three stages set out in [34] of that judgment ultimately required: 
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.  
9.	The point being, that where there is a real risk of disclosure, the law will ordinarily intervene.  
10.	The primary judge found “[t]here is a real chance Mr Paton will become seized of the confidential information imparted by the husband to Mr Lewers, which could be used to the husband’s disadvantage in these proceedings” [39].  However, based on an undertaking proffered by Mr Lewers on 10 March 2016 (some seven months after the husband raised the conflict issue), the primary judge was satisfied Paton Hooke would establish an information barrier which would “eradicate any future risk of misuse of the husband’s confidential information” [42].
11.	Thus satisfied that the husband’s interests were protected from when the undertaking was given, his Honour turned his attention to the preceding period.  The husband’s contention that steps taken on behalf of the wife revealed that the risk of misuse of his confidential information had already been realised (as evidenced by the letter signed by Mr Lewers of 9 October 2015) was rejected.  
12.	In any event, his Honour found that because the husband had submitted to the wife’s continued use of Paton Hooke “as the litigation progressed for several more months” he had waived his right to object [45].  We observe that having reached these conclusions there was no basis on which the primary judge could have restrained the wife’s solicitors from continuing to represent her. Nonetheless and probably for an abundance of caution, his Honour went on to consider whether by reference to a “comparison of the prejudice that would be respectively occasioned to [the husband and the wife]” [46] an injunction against the solicitors was warranted.  Although it is not entirely clear, it would appear that this balancing exercise was undertaken in the mistaken belief that what Osferatu at [35] required was the exercise of discretion in relation to where the balance of convenience lay (see Osferatu at [36]).
13.	The primary judge concluded that the husband’s delay in filing an application to restrain the solicitors demonstrated that he was prepared to run the risk of his former solicitors’ misuse of his confidential information up until that time, but with the undertaking in place, there was no ongoing risk.  On the other hand, the wife would be deprived of her solicitors (and counsel) of choice and to date had incurred legal expenses in the vicinity of $45,000.  She had few assets of value compared to the husband who had some $9.3 million in assets and superannuation under his control.  It followed that the prejudice to the wife if the injunction were to be granted was considerably greater than the prejudice to the husband if it was refused, which it was.
Some general observations
14.	It is well settled that the jurisdiction to restrain a solicitor from acting for a client is exceptional and to be exercised with caution, having regard to the totality of the evidence (Billington & Billington (No 2) [2008] FamCA 409).   Due weight is to be given to the public interest in a client not being deprived of their lawyer of choice without due cause.  The public interest is also predicated on a client knowing that confidential information imparted to a lawyer will not be given to an opposing party unless the law requires its production.  These public interests lie at the heart of the system of justice (Asia Pacific Telecommunications Ltd v Optus Networks Pty Limited [2007] NSWSC 350 at [42]).    
Waiver of the right to object? (ground 5)
15.	The first question to be answered is whether his Honour’s finding that the husband had waived his right to object ([45]) was available.  It is this finding that lies at the heart of the trial reasons.  If that question is answered in the affirmative, the proposed appeal must fail.  This is because the remaining challenges assert errors which, even if established, are subservient to the ultimate finding as to waiver.  
16.	The essence of this challenge is that the primary judge failed to address the evidence as to precisely what happened between 22 July 2015 (when the husband became aware the wife was a client of Paton Hooke), and when he filed his application to restrain the solicitors.  Allied to this is an assertion that the reasons given were inadequate.   
17.	In Expense Reduction Analysts Group Pty Ltd and Ors v Armstrong Strategic Management and Marketing Pty Limited and Ors (2013) 250 CLR 303 the High Court explained the nature of waiver at 315-316 thus:
30.	According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right (or privilege) by acting in a manner inconsistent with that right (or privilege). It may be express or implied. In most cases concerning waiver, the area of dispute is whether it is to be implied. In some cases waiver will be imputed by the law with the consequence that a privilege is lost, even though that consequence was not intended by the party losing the privilege. The courts will impute an intention where the actions of a party are plainly inconsistent with the maintenance of the confidentiality which the privilege is intended to protect.
31.	In Craine v Colonial Mutual Fire Insurance Co Ltd, it was explained that “‘[w]aiver’ is a doctrine of some arbitrariness introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions … It is a conclusion of law when the necessary facts are established. It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has ‘approbated’ so as to prevent him from ‘reprobating’”…
(Citations omitted)
18.	In circumstances where the husband did not expressly waive his right to object to the solicitors continuing to act, it is apparent that the primary judge considered that he had acted inconsistently with this right and ultimately impliedly waived that right.   
19.	The point of implied waiver is that even though the holder of the privilege (or right) does not intend to give it up, intention to waive is imputed.  In Mann v Carnell (1999) 201 CLR 1 at 13, the plurality of the High Court summarised the position as follows:
29. 	…This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege ... What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.
20.	Invariably, the question of implied waiver requires a fact based enquiry.  It is unlikely that the facts as found in other cases will be of assistance in a different case.  In this case, the implied waiver is said to have arisen because, after the husband objected to the solicitors continuing to act for the wife, which objection was repeated from time to time and although he did not expressly relinquish that objection, he nonetheless fully engaged in proceedings in which his former solicitors continued to act for the wife.  
21.	Turning then to the facts.  Given the finding that relevant confidential information had been provided to the wife’s solicitors and there was a real chance the information would be imparted to Mr Paton [39], we need only concern ourselves with the events which follow the husband becoming aware that Paton Hooke acted for the wife.  
22.	As we said earlier, the first the husband knew that Paton Hooke acted for the wife was when he was served with the initiating process on 22 July 2015 [17].  He then retained Marshall Lawyers who on 3 August 2015 informed Paton Hooke that they acted.  The salient points of the letter are as follows:
…
Although we are in the process of reviewing your client’s amended initiating application, financial statement and affidavit, we have been instructed to seek your response to the following prior to preparing and filing our client’s response to the amended initiating application together with our client’s financial statement and supporting affidavit.
Conflict
As you are no doubt aware, your firm has previously acted on behalf of our client and most recently in 2014. In particular, it is noted that your firm has previously provided advice to our client in relation to his financial affairs, which included discussions with our client’s Accountant, [Ms T], during which matters were dealt with that relate to your client’s current application.
There is clearly a conflict of interest in your firm acting on behalf of [the wife] in so far as your firm is privy to confidential information provided by our client to your firm. Your firm would be in breach of its duty of loyalty to client and duty of confidentiality if it was to continue to act against our client in relation to this application.
We are instructed to request that your firm immediately withdraw its representation of the [wife] on the basis of conflict and to file a notice of intention to cease to act. In the event that your firm does not comply with this request, we will seek instructions to make an urgent application to the Court for an order injuncting your firm from continuing to act and to seek an order for indemnity costs.
…
(Husband’s affidavit filed on 10 December 2015, Annexure “A”) 
23.	Reference was made to the Court’s pre-action procedures and concluded with the observation that the husband was “willing to participate in dispute resolution” prior to the first court date.  As we understand it, he proposed a mediated resolution with the wife as to the financial dispute.  
24.	In a somewhat unedifying response on 5 August 2015, Mr Paton wrote to Mr Marshall disputing there was a conflict of interest and, inter alia, sought details of the alleged advice previously given to the husband [19].  Marshall Law responded on 7 August 2015.  Again, by reason of his Honour’s finding we will focus on that portion of the correspondence which goes to the question of waiver.  Marshall Law wrote:
...
Not withstanding (sic) our client’s position in relation to the issue of conflict, we are instructed not to pursue the matter any further at this stage given the time constraints imposed upon our client in order to prepare a response to the application and to prepare for the hearing which we note is set down for 7 September 2015. However, we are instructed to confirm that our client reserves his rights generally.
…
(Wife’s affidavit filed on 7 March 2016, Annexure “D”)
25.	The solicitor advised that the husband was willing to attend mediation and the wife was requested to agree to adjourn the looming interim hearing to “enable [the husband] to focus on the mediation process and in particular for the parties to agree on a balance sheet prior to mediation”.  Thus it can be seen from the outset that the husband argued that Paton Hooke should cease to act and then proposed steps which assumed their continued involvement.  
26.	His Honour viewed it as important that the detail provided as to confidential information proffered by the husband’s solicitors in August 2015 was “much more sparse” than that contained in the husband’s affidavit filed in December 2015 [21].  It is appropriate to point out that in August 2015 the husband’s file was held by the wife’s solicitors and it was only on 1 October 2015 that the file was handed over.
27.	In any event, on 18 August 2015, the wife’s solicitor wrote to the husband’s solicitors advising she was happy to attend mediation and would contemplate an adjournment of her application for interim orders upon certain conditions.  Nothing was said about ceasing to act.
28.	In the husband’s solicitor’s response of 20 August 2015, the husband again pressed the question of an adjournment and said “[i]n relation to mediation, our client is in the process of finalising his response affidavit and financial statements and we anticipate that our client would be in a position to disclose financial statements and for the parties to work towards an agreed balance sheet next week”.  From this letter it was apparent that the husband had retained counsel and nothing further was said about the restraint issue.
29.	Further correspondence passed between the solicitors on 1 September 2015 about the forthcoming hearing but again nothing was said about the issue.  
30.	The parties duly attended a Case Assessment Conference with a registrar on 3 September 2015 where various orders and directions were made by consent.  This included the provision of lump sum partial property settlement in favour of the wife, various injunctions and directions as to disclosure.  The Court was not asked to deal with the restraint issue and the terms are silent on the point.  
31.	Of this period the primary judge said:
29. 	Significantly, those corporations and trusts were entities the husband had formerly discussed with Paton Hooke in 2012, but the husband had no objection to Paton Hooke representing the wife in proceedings which resulted in interim orders being made in respect of those entities.  As a consequence of those interim consent orders being made on 3 September 2015, the interim hearing fixed for 7 September 2015 was vacated.  
30.	The husband filed his Response on 3 September 2015.  He did not take the obvious opportunity to seek orders in his Response, on either an interim or final basis, to restrain the wife’s solicitors from further representation of the wife.  That was a perfect opportunity eschewed by the husband.  
32.	Between 8 September 2015 and 1 October 2015 there was regular correspondence (nine pieces in all) between the parties’ solicitors which variously traversed giving effect to the 3 September 2015 orders, the exchange of information as to the formulation of a list of property owned by the parties and the valuation thereof, and the legal merits of the parties’ positions.  No mention was made of the restraint issue.
33.	On 1 October 2015 the husband’s file was given to Marshall Law. 
34.	Notably, although Mr Paton prepared a letter of 9 October 2015, in his absence it was signed by Mr Lewers.  This letter traverses difficulties that had arisen in relation to valuations, the distribution of superannuation and other matters of substance in the financial dispute. 
35.	On 14 October 2015 the husband’s solicitor wrote two letters to the wife’s solicitors about further disclosure and answering questions about the parties’ health insurance.  No mention was made of the restraint issue.
36.	However, on 16 October 2015, the husband’s solicitors again raised the issue of restraint.  The solicitor wrote:
…
Conflict 
As you are aware, we have previously raised our clients (sic) concern regarding your firm acting on behalf of the [wife].  We note that we have not, to date, received a satisfactory response to this issue.
Under cover of a letter dated 1 October 2015 from your firm, we have received a folder identified as “[Dalton] Estate Planning” File No XXX.   A review of the file indicates that your firm acted for [the husband] in 2012 in relation to his estate planning, including detailed instructions regarding his intentions as to inter vivos gifts to your client and other members of his family together with instructions as to the drawing of a new Will for [the husband].
In addition, the file clearly indicates that Mr Lewers was involved in meetings with [the husband] regarding the above.  Of particular concern, it now appears that Mr Lewers is involved in assisting your client in this matter.  We note that he signed your letter of 9 October and assume he has taken carriage of this matter in your absence.
In our view, irrespective of disclosure rules, there is a clear conflict of interest in your firm continuing to act for [the wife] and in that regard we are instructed to request that your firm agree to cease to act or otherwise provide us with a detailed explanation as why (sic) you do not believe there is any conflict or how you intend to manage the conflict.
We look forward to receiving your response to the matters raised herein and a number of other outstanding issues previously raised and to which we have yet to receive a response.
…
(Wife’s affidavit filed on 7 March 2016, Annexure “AA”)  
37.	We assume the reference to “other outstanding issues” is to the ongoing process of disclosure and valuation with a view to mediation.  The “conflict” issue comprises a comparatively small component of the letter and in this correspondence the husband demonstrated that he continued to object to the solicitors acting while also fully engaged with the wife and her solicitors in the negotiation, mediation and litigation of their financial issues.
38.	Correspondence between the solicitors continued which overwhelmingly addressed valuation and preparation for mediation and for disclosure.  Of the correspondence which passed until 9 December 2015 the only reference to the restraint issue, if indeed this is what it is, is a letter of 2 November 2015 in which Mr Marshall refers to “a number of other outstanding matters” identified in specified correspondence.  The issue is again explicitly engaged when, on 9 December 2015, the solicitors for the wife informed the solicitors for the husband that an application for an injunction to restrain them continuing to act would be resisted, presumably on the basis of waiver.
39.	The parties appeared before a registrar on 1 December 2015 and it was foreshadowed that the husband would shortly file an application to restrain the wife’s solicitors from acting.  That application was duly filed on 10 December 2015 and then served on 21 December 2015.  It is telling that, in the letter of service, the husband continues to engage with the respective merits of the parties’ property proceedings and preparation for trial.  Correspondence of that ilk continued right up to the hearing.
40.	We agree with the primary judge that the husband waived his right to object to Paton Hook acting for the wife.  As early as 3 August 2015 the husband knew enough of the circumstances to cause his solicitors to tell Paton Hooke that unless they ceased to act a restraint application would be brought against them. This was not done for many months.  During the interregnum and inconsistent with the objection, he took significant steps in the dispute with his wife, relevantly while the solicitors continued to act on her behalf.  These steps included negotiation and resolution of important interim financial matters, participation in court events, mutual financial disclosure, agreement to mediate the entire dispute and arrangements for that mediation and an agreement as to the valuation of assets and arrangements therefore.  These matters went to the heart of the litigation from which the husband said Paton Hooke should withdraw.  There can be no room to doubt that the husband took up two inconsistent positions and that his actions were inconsistent with his stated objection.
41.	The husband’s case is not strengthened by the unacceptably lengthy period of time Paton Hook took to deliver his file.  This is because he previously said he already had sufficient evidence to mount an action to restrain the solicitors. And, having received the file he waited another couple of months to act whilst simultaneously taking steps inconsistent with the objection.  The sense one gains from the husband’s solicitor’s correspondence and the evidence adduced in his case is that the husband was focused on securing a prompt mediated agreement with the wife, even if she insisted that Paton Hooke act for her, and he was willing to take steps inconsistent with his stated objection.  As the primary judge found at [46] the husband was willing to run the risk of misuse of confidential information until it suited him to press an application to restrain the solicitors.  In these circumstances it would have been quite wrong to allow him to reprobate those actions.
42.	It follows that we are satisfied his Honour’s reasons are adequate to the task.
43.	Error as alleged is not made out.  As we said earlier if this ground failed, the proposed appeal must fail.  Nonetheless it is appropriate for us to address the remaining grounds, albeit somewhat briefly.
The restraining order should have been made (ground 1)  
44.	The gravamen of ground 1 is that once the primary judge found the wife’s solicitors were in possession of the husband’s confidential information which may be relevant to the parties’ property dispute and that there is a risk the information would come into the possession of the wife’s solicitor, his Honour erred by failing to issue the injunction.  As explained to us, the essence of the challenge contained by this ground is that as the three stages described in PhotoCure at [50] were resolved in favour of the husband, the primary judge was obliged to restrain the wife’s solicitor.
45.	We do not agree.  As the Full Court said in Osferatu at [35], whether or not any relief is required involves a balancing exercise of the type referred to in that paragraph and as is set out earlier in these reasons.  The question is not whether “there is any risk” but whether the risk is real (Osferatu at [39]).  It seems to us that the magnitude of the risk can be addressed at the third step of PhotoCure at [50] or in the ultimate balancing exercise.  Where, as occurred in this case, the solicitor’s arrangements are designed to address and extinguish the risk, that evidence must be considered before the Court decides whether or not the relief sought should be granted.
46.	It follows that ground 1 would not succeed.
Information barrier (grounds 2, 3 and 4)
47.	These grounds were argued together and challenge his Honour’s approach to the information barrier proposed by the wife’s solicitors and in finding that Mr Lewers’ involvement for the wife in the litigation was “transient and tangential”.
48.	The essence of ground 2 is that the primary judge erred “in then proceeding to consider whether the risk of the information being used to the appellant’s disadvantage could be lessened or reduced”.
49.	There is an obvious connection between grounds 1 and 2.  In relation to ground 2, it is sufficient to observe that the primary judge was obliged to consider the evidence adduced in the wife’s case, including the undertaking from Mr Lewers, in order to determine whether the wife and her solicitors had discharged the burden of establishing there was no real risk the information would come into the possession of those in the firm who worked for the wife.
50.	We do not accept the contention that his Honour’s finding that “I accept that [Mr Lewers’] adherence to the undertaking will eradicate any future risk of misuse of the husband’s confidential information” [42] is in conflict with his finding that “[t]here is a real chance Mr Paton will become seized of the confidential information imparted by the husband to Mr Lewers, which could be used to the husband’s disadvantage in these proceedings” [39].  The trial reasons must be read in their entirety.  Approached in this manner, it can be seen that the reasoning provides a continuum and that his Honour’s finding at [39] reflects his satisfaction that the husband had established the first two stages which required consideration.  At [40], the primary judge turned his attention to the third stage and whether the evidence adduced in the wife’s case met the burden reposed in her.  It is at this stage that the                                          information barrier evidence was considered and his Honour’s finding at [42] is that the evidence as to the information barrier eradicated the risk identified.
51.	In furtherance of the challenge to the significant weight given to Mr Lewers’ undertaking, his Honour’s finding that “the husband did not submit the undertaking” should be disregarded, so he must be taken to concede that the undertaking will erect an “information barrier” of the type discussed in the authorities” [42], was said to be erroneous.  We agree with senior counsel for the husband that the senior counsel who appeared for him in the court below did indeed challenge the weight to be afforded to the undertaking.  This is evident from the exchanges below:
[Counsel for the husband]:   My client’s affidavit – giving greater specificity to that which was contained in the letter of 7 August, one would have thought at that moment there would have been an information barrier undertaking provided and not on the – not at the doorstep of the court, as it were.  That’s the first indication we’ve had of any such undertaking being provided, and, as I say, the alarm to my client is heightened by that very letter signed by Mr Lewers.  Had he not entered the fray and been the author of – or at least the person who signed the letter, and had an undertaking been given upon the service of the application, your Honour would, in my respectful submission, treat that differently than you would now.
HIS HONOUR:   I don’t see that.  To make that submission, it necessarily imputes that less veracity can be accorded to the belated undertaking.
[Counsel for the husband]:   Well, one would have thought, your Honour, if – unless they wish to prosecute a response to this application, which they seemed fairly intent on doing, and raising other issues in it at very late notice to our client, one would have thought that the undertaking would have been given in December.
(Transcript, 11 March 2016, page 37, lines 1-17) 
52.	Indeed, the adequacy of the undertaking and effectiveness of the proposed information barrier was the subject of further submissions and there can be no doubt that the efficacy of that arrangement was contested.  However, the question becomes whether his Honour’s remarks in the second sentence of [42] are material?  In our view, they are not.  This is because at [41] and at the commencement of [42] the primary judge had already set out the terms of the undertaking and, albeit briefly, decided that the undertaking eradicated the risk of misuse of the husband’s confidential information.  His Honour reached that position without taking into account what it was the husband supposedly conceded about the efficacy of the information barrier.
53.	Before we address grounds 3 and 4 it is helpful to set out the undertaking: 
UNDERTAKING TO THE COURT
I PAUL RICHARD LEWERS of Paton Hooke Lawyers … undertake to the Family Court of Australia and to Marshall Law and their client, [Mr Dalton], that I will not disclose any information that I may be aware of concerning either [Mr Dalton] or the proceedings before the Family Court of Australia between [Ms Dalton] and [Mr Dalton] to any other person.  In that regard, I undertake not to:
1.	Speak with [Ms Dalton] or any person at Paton Hooke Lawyers concerning any information I may have concerning [Mr Dalton] or her [sic] proceedings;
2.	Disclose directly or indirectly any information that I may have in my possession or control concerning [Mr Dalton] and his proceedings;
3.	Have any involvement with the proceedings;
4.	View any correspondence files, tax invoices, briefs or emails either sent to Paton Hooke Lawyers or received by them, nor be involved in the matter in any manner whatsoever in the future;
6.	Convey to any person any information about the affairs of [Mr Dalton] which I may have as a result of my employment with Paton Hooke Lawyers.
Signed:
…………………………
Paul Lewers
Dated:  10 March 2016 
(Undertaking of Mr Lewers, Exhibit W3) 
54.	The essence of grounds 3 and 4 is that when considered in context the primary judge erred in finding that adherence to the undertaking would eradicate any future risk of misuse of the husband’s confidential information.  We are inclined to agree.  The undertaking proffered by Mr Lewers did no more than attempt to provide an information barrier which protected the husband’s information reposed in Mr Lewers.  It was silent about the information received by the firm during the period the husband was a client.  For the undertaking to be effective it needed to be comprehensive and to demonstrate that there were systems in place which established an effective information barrier. 
55.	We agree with senior counsel for the husband that ordinarily evidence would be provided by a practice manager, or that style of person, which explained the manner in which the practice maintained and stored confidential information received by a client during the retainer, how and who might access that information and how, in the daily operations of the practice, the affected party and the court could be confident that the integrity of the information system would be maintained.  
56.	In this case, merely excluding Mr Lewers from further involvement in the proceedings along the lines contained in his undertaking fell well short of “clear and convincing evidence” that there existed effective measures to protect against a real risk of disclosure or misuse (Osferatu at [33]).  By way of contrast, the evidence given by the firm in Osferatu and the accompanying undertaking was far more comprehensive than that proffered in this case (see also Photocure at [79] – [81]).  
57.	The finding as to the eradication of any future risk of misuse of information was not, in these circumstances, available. 
58.	We are similarly troubled by his Honour’s finding that Mr Lewers’ involvement in the wife’s case as evidenced by his signature on the letter of 9 October 2015 was “transient and tangential.”  Although we do not agree with the submission by senior counsel for the husband that, based on Mr Lewers’ signature on the letter, it follows that he had given the wife advice in relation to the matters contained in the letter, we are satisfied that by affixing his signature it should be inferred that Mr Lewers knew that the wife had given instructions to his partner in relation to the matters contained in the correspondence.  While this is at the lower end of the spectrum of involvement in the proceedings, the subject matter of the correspondence was of considerable importance. 
59.	In our view, the fictional bystander would understand that when Mr Lewers affixed his signature, he understood that the husband had raised the issue of his confidential information and asserted that the firm should cease to act.  Although the fictional bystander would understand that Mr Lewers’ involvement was not substantial, in our view the bystander would not have any confidence that Mr Lewers or the firm had acted to protect the husband’s confidential information. 
60.	But for the fact that the husband has failed to disturb the finding as to waiver, these grounds would have been sufficient to justify the setting aside of his Honour’s orders.
The exercise of discretion (grounds 6, 7, 8 & 9)
61.	By these grounds the husband challenged the manner in which the primary judge exercised his discretion to refuse the husband’s application and the factors which his Honour took into account.  As we said earlier, the primary judge approached the ultimate balancing exercise as to whether to grant or refuse the application on the basis that doing so required a “comparison of the prejudice that would be occasioned” to the husband and the wife.  This was done in the following terms:
47.    	The wife has conferred with the counsel of her choice, and, although the husband’s application does not extend to an injunction against that counsel, it is difficult to see how he would not be similarly compromised if Mr Paton was compromised.  The wife deposed to her expenditure so far of $45,000 in legal fees (exclusive of counsel’s fees).  Much of that expenditure will have been wasted if she is now compelled to engage new solicitors in the litigation.  The wife’s financial circumstances are not so favourable that she is able to afford such waste. The husband’s financial circumstances are far superior to the wife’s.  Her income from superannuation comfortably covers her recurring expenses, but she only has $10,000 in the bank.  Otherwise, her property interests are locked in two encumbered real properties, one of which she occupies with her son.  By comparison, the husband deposed to ownership of assets with a net value of $7.5 million and a superannuation interest of $1.8 million.  
48.	The prejudice to the wife if the injunction is granted is considerably greater than the prejudice to the husband if the injunction is refused.
62.	The husband contends that these deliberations evidence a mere “balance of convenience” approach of the type usually associated with interlocutory orders whereas his Honour was required to, in effect, identify special circumstances which would justify refusal to grant the injunction.  Although we agree with these sentiments, we think the point is better encapsulated in Asia Pacific Telecommunications Limited v Optus Networks Pty Ltd per Bergin J at [42] – [43]:
42.   …The parties accept that such jurisdiction is to be regarded as exceptional and 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 due cause: Kallinicos v Hunt at [76]. In some cases the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a basis for refusing relief: Kallinicos v Hunt at [92]. However in my view if the court is otherwise of the view that the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice, requires the lawyers to cease to act there would have to be evidence of a most compelling nature as to the cost, inconvenience and impracticality to avoid an order restraining the lawyers from acting further. There is no evidence in this case of such cost, inconvenience or impracticality.
43. 	As Bryson J said in D & J Constructions Pty Ltd v Head & Ors t/as Clayton Utz at 123:
Cautious conduct by the court is appropriate because the spectacle or the appearance that a lawyer can readily change sides is very subversive of the appearance that justice is being done. The appearance which matters is the appearance presented to a reasonable observer who knows and is prepared to understand the facts”.
63.	It is accepted that his Honour’s findings at [47] were available, either as reflected in the evidence or by inference, however, they could not amount to “evidence of a most compelling nature as to the cost, inconvenience and impracticality” which might justify refusing an application to restrain the lawyers from continuing to act.  Again, but for the fact that the husband has failed in his challenge to the waiver finding, grounds 6 and 7 would have warranted intervention in the orders. 
64.	Grounds 8 and 9 sought to challenge aspects of the factual findings referred to in [47] of the trial reasons.  As we have already indicated, those findings were available and these grounds will fail.
Conclusion and costs 
65.	It was common ground that the husband required leave to appeal. In some respects the husband was able to raise sufficient doubt about the trial reasons to justify consideration by this court and, supposing the decision to be wrong, to also demonstrate that he would suffer substantial injustice.  In addition, the proposed appeal raised matters of considerable importance.  It is appropriate that leave be given to appeal.  
66.	As to the appeal, the husband failed to establish error in his Honour’s decision that he waived his right to object to the wife’s solicitor’s continuing to act.  Although there are aspects of his Honour’s decision which were in error, these errors only become relevant if the waiver component of the appeal was made good.  This did not happen and the appeal should be dismissed.  
67.	In the event the application failed, the husband properly agreed that he should pay the wife’s costs.  An order will be made to that effect. 
MURPHY J
68.	I have now had the advantage of reading in draft form the reasons of Ainslie‑Wallace and Ryan JJ. 
69.	The issues raised in the application for leave to appeal involve matters of principle relevant to the conduct of solicitors in family law proceedings and involve the potential for substantial injustice to the parties.  I agree that leave should be granted.  I also agree, however, that the appeal should be dismissed.   
Waiver
70.	I agree with Ainslie-Wallace and Ryan JJ that the primary judge was correct in concluding that the husband waived any right to relief arising from the wife’s solicitors continuing to act in the proceedings.  
71.	I agree generally with their Honour’s reasons for that conclusion.  In addition to the matters discussed by their Honours in reaching that conclusion, I would add that the primary judge found as a fact:
	26.	Paton Hooke declined to voluntarily cease representation of the wife in the proceedings. The husband then expressly instructed Mr Marshall to desist from making any application to restrain Paton Hooke from acting for the wife. His explanation for that was as follows:
At this time, I felt that I was struggling emotionally with the shock and distress as a result of being served with the application.  At that time, I felt that it was more important to try and address the current application rather than complicate things further.
72.	While the husband’s explanation might be correct, and perhaps understandable, it masks the fact that following those express instructions to his solicitor, negotiations took place with, all the while, Paton Hooke acting for the wife.  It was only after those negotiations broke down that an application was made for them to cease to act.  
73.	As was pointed out by the primary judge, the initial complaint made by the husband’s solicitors to Paton Hooke gave little detail of the information said to be confidentially disclosed to Mr Lewers at that firm.  On the husband’s case, his current solicitor was present together with Mr Lewers on each and every occasion upon which the husband alleges confidential information was disclosed.  That is, the husband’s solicitor had himself full knowledge of all of the matters that were said to be confidential and in need of protection from disclosure.
74.	The husband’s express instructions to not pursue an application, given to a solicitor who had knowledge of the matters said to be confidential, were immediately succeeded by attempts to negotiate a settlement of the very issues to which the confidential information was later said to pertain and which were said to need protection from disclosure.  Of course, that brought with it the wife incurring legal fees with the solicitors of her choice.
75.	Taken together, those circumstances and the matters raised by Ainslie-Wallace and Ryan JJ present a compelling picture of the husband acquiescing in the solicitors continuing to act in a dispute involving the very issues which later form the basis for his application.
76.	In my view, his Honour was clearly correct in finding waiver by the husband. 
Use of Confidential Information and s 79 Property Claims
77.	I wish to add some reasons of my own with respect to the issue of whether the wife’s solicitors were in possession of information which is confidential to the husband such that there was a real risk that, adverse to his interests, the information will likely come into the possession of the wife.
78.	The primary judge found:
36.	Although not free from doubt, the evidence adduced by the husband in his affidavit filed in December 2015 suggests he imparted confidential information to Mr Lewers that could be divulged to Mr Paton and might be used to his disadvantage in these proceedings.
37.	The wife contended such a conclusion could not be reached because the husband’s evidence about the nature of the confidential information lacked sufficient specificity and cogency. The evidence did not have the degree of specificity it could have had, but the husband was no doubt conscious of the danger of revealing the confidence he wanted to protect. A comprehensive explanation of the detailed information that passed between him and Mr Lewers might, paradoxically, render the privacy of the information otiose.
38.	Erring on the side of caution, I am satisfied the discussion with Mr Lewers, albeit in the context of inter vivos gifts and testamentary dispositions, about corporations, trusts, and assets that will be the subject of attention in these property settlement proceedings placed Mr Lewers in a position of conflict.
39. 	Since Messrs Lewers and Paton conduct business together in Paton Hooke Lawyers, Mr Lewers’ conflict affects Mr Paton’s representation of the wife. There is a real chance Mr Paton will become seized of the confidential information imparted by the husband to Mr Lewers, which could be used to the husband’s disadvantage in these proceedings.
79.	The authorities in this and other courts relevant to restraining a solicitor from acting have been comprehensively reviewed in McMillan & McMillan and, more recently, in Osferatu & Osferatu.  
80.	In the former case, the Full Court said:
	87.	In other words, the client need only give evidence that he has provided confidential information to the solicitor (or in this case, the law clerk/secretary). The client does not have to divulge the content of that information. (See Mills and also Lindenmayer J. in Stewart). In the present case, we consider it sufficient, as we said earlier, that the husband has sworn that he had given instructions to Mr Pitts as to how he wished his “matter to be conducted and the position to be put to the wife”. It is obvious that such matters would come within the description of “confidential information”.
81.	However, in Osferatu, the Full Court concluded that “[n]othing that appears in Stewart, Thevanez or McMillan obviates the need for an applicant seeking such relief from discharging his/her burden of proof by adducing cogent and persuasive evidence” (at [26]).  
82.	The Full Court then, at [27], cited with approval comments made by Bryson J in Mancini v Mancini which bear repeating in full here:
It is of importance to observe that information generally is not protected; the protection available relates to confidential information, and is available to the person entitled to the confidence. No circumstances were put forward in which Mrs Mancini herself is entitled to the protection of the law against the use of any particular information by Mr Mancini or by the lawyers whom he has chosen to retain. It is not possible to address in any clear way and to come to a decision on protection of any alleged confidential information without identifying what the confidential information is in a sufficiently specific way to enable it to be identified. Without doing that it is not possible to come to a conclusion on whether the information truly is confidential, to consider and appraise the circumstances in which it came into existence and was communicated, to come to any conclusion about whether protection is appropriate, or to make any enforceable order. A case about confidential information cannot be nebulous. Confidential information which once existed may no longer be confidential; it may no longer be available although it was communicated in the past; it may not be material to any use which might now be proposed to be made of information. Without specificity a claim to protection cannot be defended or decided on any fair procedural basis, and a general allegation of the kind put forward here to the effect that from the nature of the past legal business confidential information must have been communicated should not in my opinion be upheld.
(Emphasis added by the Full Court in Osferatu)
83.	The authorities just referred to establish in my view that an application to restrain a solicitor from acting must be founded on, relevantly, proof of confidential information that is particularised and is shown to remain confidential and to be in need of protection from disclosure.  While his Honour acknowledged the question as being “open to doubt”, I am unable to see that it was open to his Honour on the evidence before him to conclude that the husband had satisfied his evidentiary burden.
84.	The claim made by the husband as to confidentiality through his solicitor in that solicitor’s letter to Paton Hooke could in my view be described fairly as “nebulous”.   Later, in his affidavit the husband deposed:
13.	On or about 26 June 2012, I had a meeting with Mr Lewers and Mr Marshall at the offices of Paton Hooke Lawyers, during which I discussed the preparation of a new Will and succession planning generally in relation to my assets and Estate, and in particular the distribution of my assets between [the wife] and the [Dalton] family. I recall those discussions were detailed and highly confidential in relation to my thoughts and wishes and how best to accommodate a fair outcome for [the wife] as well as the [Dalton] family, bearing in mind the significant history associated with the [Dalton] family and my business and numerous property holdings.
14.	The discussions that took place at the offices of Paton Hooke Lawyers and in particular with Mr Lewers regarding my proposed new Will were wide ranging and I understood our discussions to be confidential. I remember feeling very uncomfortable discussing the intricate details of my marriage and my concerns with Mr Lewers without [the wife’s] knowledge. However, knowing that this was confidential made the process easier.
…
18.	The issues raised at the various meeting (sic) with lawyers from Paton Hooke Lawyers included my current Will, produced by [X Firm], my farming properties, our home in [Town N], my business companies, namely [H] Pty Limited and [S] Pty Limited, my Family Trust, The [Dalton] Retirement Fund Trust Deed, bank balances, shareholdings,, (sic) Disability Trusts, Tax Matters and confidential personal matters, including my relationship with [the wife], [the wife’s] children and the [Dalton] family. In addition, my accountant Ms [T] provided considerable financial information to Paton Hooke.
(Husband’s affidavit filed on 10 December 2016) 
85.	The information said to be confidential is explained more expansively in that affidavit, but, in terms of the husband satisfying his evidentiary burden not, as it seems to me, with any more relevant particularity than the original assertion.
86.	His Honour is of course correct, at [37] in identifying a tension arising from the need to satisfy that burden: the disclosure of the confidences properly in need of protection destroys the confidence.  Yet that danger is a long way removed from the absence of particularity contained in the husband’s evidence. 
87.	That is all the more so because here the particularity required of the husband’s affidavit (and indeed letters written on his behalf) was drafted by a solicitor who was privy to all of the information said to be in need of protection.  The solicitor was uniquely placed to draft, upon the husband’s instructions, the husband’s affidavit so as to meet (if that were possible) the necessary particularity while, at the same time, not rendering the confidence otiose.
88.	A further, and to my mind crucial, additional consideration attending the inquiry as to what information was and remained confidential and whether protection from disclosure was necessary, is that family law property proceedings provide a particular context for that inquiry.
89.	The husband was required to give full and frank disclosure of all information relevant to the case and, specifically, his financial circumstances.  In light of the husband’s express instruction to his solicitor to not make any application for restraint so as to permit negotiations, it should be noted that the duty pertains to “all material facts, documents and other information” and abides during “all stages during the pre-action negotiations”.  
90.	Thus, although information given by a client to a solicitor might be confidential, it cannot be said to either remain confidential or to be in need of protection to the extent that the information is required to be disclosed by reference to the expansive obligations just referred to.  
91.	It follows in my view that the husband’s evidentiary burden extended to delineating the confidential information said to both remain confidential and to be in need of protection from that which he had a duty to disclose.  Reference to [18] of the husband’s affidavit earlier quoted, quite apart from its lack of particularity, cannot in my view be seen to do that.
92.	In my view, not only does the husband not disclose any error on the part of the primary judge as asserted by ground 1, but his case for injunctive relief before his Honour had less merit than was accorded to it by his Honour.
I certify that the preceding ninety-two (92) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Ryan & Murphy JJ) delivered on 28 April 2017.

Associate:  

Date:  27 April 2017