Barron v Ward Keller Pty Ltd [2006] NTSC 43

PARTIES:	BARRON, James Robert

	v

	WARD KELLER PTY LTD Trading as Ward Keller

TITLE OF COURT:	SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION:	CIVIL

FILE NO:	46 of 2006 (20611595)

DELIVERED:	5 June 2006

EDITED:	In accordance with Orders made on 
	6 June 2006

HEARING DATES:	30 May 2006

JUDGMENT OF:	SOUTHWOOD J

CATCHWORDS:

PRACTICE AND PROCEDURE – Legal practitioners – confidential information – duty of confidence to former client – maintaining confidentiality of certain information of a former client- whether injunction should be granted to prevent firm from acting against interests of former client

EQUITY – FIDUCIARY OBLIGATIONS – EQUITABLE REMEDIES – INJUNCTIONS – for the purpose of restraining a breach of fiduciary duty – possession of confidential information – risk of use of confidential information – real risk of disclosure of confidential information to former client’s detriment – administration of justice

Belan v Casey [2002] NSWSC 58; NASR v Vihervaara (2005) 91 SASR 222; Photocure ASA v Queen’s University at Kingston 56 IPR 86; Sent and Primelife Corp Ltd v John Fairfax Publication Pty Ltd [2002] VSC 429 - applied

REPRESENTATION:

Counsel:
	Plaintiff:	C. Ford
	Defendant:	J. M. Neill

Solicitors:
	Plaintiff:	Cridlands
	Defendant:	Ward Keller

Judgment category classification:	C
Judgment ID Number:	Sou0626
Number of pages:	9

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Barron v Ward Keller Pty Ltd [2006] NTSC 43
No. 46 of 2006 (20611595) 

	BETWEEN:

	JAMES ROBERT BARRON
Plaintiff

	AND:

	WARD KELLER PTY LTD 
Trading as Ward Keller
	Defendant

CORAM:	SOUTHWOOD J

REASONS FOR JUDGMENT

(Delivered 5 June 2006)
(Edited in accordance with Orders made 6 June 2006)

Introduction
[1]	This is an application for injunctions restraining the defendant, a firm of solicitors, from acting against the plaintiff in the face of a conflict of interest between the plaintiff, who was a former client of the defendant, and Mathew Lesley Neil, an existing client of the defendant, and to preserve the confidentiality of information given to the defendant by the plaintiff. 
[2]	By originating motion dated 27 April 2006, the plaintiff seeks the following orders:
1.	The defendant, whether by its directors, servants, agents or otherwise howsoever, be restrained from acting or continuing to act for Mathew Lesley Neil against the plaintiff.
2.	The defendant, whether by its directors, servants or agents or otherwise howsoever, be restrained from using or disclosing to any person any information acquired or obtained about the plaintiff during the course of acting for the plaintiff between May 2005 and August 2005; and
3.	The defendant, whether by its directors, servants, agents or otherwise howsoever, be restrained from commencing proceedings in any court on behalf of Mathew Lesley Neil against the plaintiff.
[3]	In support of the application the plaintiff relies on an affidavit of Rhona Mary Douglas Millar sworn on 28 April 2006 and two affidavits of the plaintiff both sworn on 10 May 2006.
The facts
[4]	The facts are not in dispute.  They are as follows.
[5]	The plaintiff is a medical practitioner who now practises as a general practitioner in Darwin.  He is 40 years of age.  … 
[6]	On 19 May 2005 the plaintiff had an initial conference with John Michael Neill, a partner in the defendant firm of solicitors.  At the initial conference the plaintiff and Mr J M Neill discussed a number of confidential matters which concerned the plaintiff between 1993 and 2005.  … 
[7]	… 
[8]	…  None of this information was told to Mr J M Neill.
[9]	… 
[10]	By letter dated 20 December 2005, less than six months after the plaintiff received the written advice from the defendant, the defendant informed the plaintiff of a potential negligence claim against him by Mathew Lesley Neil.  It is contended by Mr M L Neil that in December 2003 the plaintiff may have misdiagnosed Mr M L Neil’s medical condition and that instead of diagnosing that Mr M L Neil was suffering from viral cardiomyopathy the plaintiff made a diagnosis that Mr M L Neil was suffering from asthma.  As a result of the misdiagnosis Mr M L Neil complains that he had a heart attack in January 2004 which led to him suffering severe brain damage.  Further, it is possible that if the plaintiff had correctly diagnosed that Mr M L Neil was suffering from a heart condition he might have avoided the heart attack and subsequent brain damage.
[11]	Mr M L Neil has not as yet commenced legal proceedings against the plaintiff.  His legal advisers are still investigating his claim.  However, the defendant, on behalf of Mr M L Neil, has advised the solicitors for the plaintiff of an imminent application for pre-trial discovery of the plaintiff’s notes of his consultations with Mr M L Neil.
The issue
[12]	The principal issue in the proceeding is whether the confidential information that the plaintiff gave to the defendant is relevant to the subject matter of Mr M L Neil’s retainer of the defendant.  The defendant admits that it received the information which is the subject of this proceeding and that the information is confidential.
[13]	The information is relevant to the subject matter of Mr M L Neil’s retainer of the defendant if it – assists in proving or disproving directly or indirectly an issue in any claim that Mr M L Neil may have against the plaintiff; could be used to the plaintiff’s detriment in the general conduct and progress of the proceeding, as well as in relation to the assessment of the strength and weakness of his case: Photocure ASA v Queen’s University at Kingston 56 IPR 86 at par [22] per Goldberg J; would be helpful to counsel in the cross examination of the plaintiff including cross examining the plaintiff as to his credit: Belan v Casey [2002] NSWSC 58 at [18]; deals with issues, tactics and strategies which might arise in the course of the proceeding, and the manner in which the proceeding might be conducted: Photocure ASA v Queen’s University at Kingston (supra) at [28]; and has enabled the defendant to learn a great deal about the plaintiff: Sent and Primelife Corp Ltd v John Fairfax Publication Pty Ltd [2002] VSC 429 at [67].
[14]	I agree with Doyle CJ that resolution of the issue of relevance “does not require a prediction by the court that the solicitor will prefer the interests of the new client to those of the former client, and will use confidential information gained from the former client to the disadvantage of that client and to the benefit of the new client.  It is the possession of the confidential information obtained from the former client, and the conflict between the duty owed to the former client and the new client, that is the basis for the grant of the injunction.  The possibility of the misuse of the confidential information to the disadvantage of the former client … is the possibility that arises because of the conflicting duty owed, not because of a prediction about how the solicitor will deal with the conflict”: NASR v Vihervaara (2005) 91 SASR 222 at 227.
[15]	In my opinion, for the reasons set out below, the confidential information that is the subject of the proceeding is relevant to the subject matter of Mr M L Neil’s retainer of the defendant and there is a real rather than theoretical conflict of interest.
The plaintiff’s argument
[16]	The plaintiff argues as follows.  The defendant’s letter of 20 December 2005 to the plaintiff contains particulars of negligence that are likely to form the foundation of Mr M L Neil’s claim against the plaintiff.  The particulars are:
1.	The symptoms of Mr M L Neil’s viral cardiomyopathy were or ought to have been apparent when he consulted the plaintiff in 2003.
2.	The symptoms Mr M L Neil complained about were caused by viral cardiomyopathy and perhaps related to congestive heart failure.  The symptoms were not caused by asthma and the plaintiff’s diagnosis in this regard was incorrect.
3.	If the plaintiff had diagnosed a heart condition and referred Mr M L Neil to hospital and/or a cardiologist, he might have avoided the heart attack and subsequent brain damage.
[17]	Issues in any proceeding by Mr M L Neil against the plaintiff will include his competency, his powers of observation, his attention to Mr M L Neil’s symptoms, his history taking, his knowledge/memory of the symptoms of cardiomyopathy, his capacity and ability to distinguish between the symptoms of the two medical conditions, his note-taking and record keeping, his powers of deduction and induction, his knowledge and acceptance of  his own limitations, his confidence, the standard or level of his diagnostic performance, any impairment of his capacity to make a correct diagnosis, his fitness to practice and his credibility.
[18]	Counsel for the applicant, Mr Ford, submits that the information in the possession of the defendant opens up investigations into and cross examination about the plaintiff’s personal history and manner of practice which in the normal course would not occur to a plaintiff suing a doctor.  … 
The defendant’s argument
[19]	On behalf of the defendant, Mr J M Neill argued that there was no risk that the confidentiality of the information would be lost if the defendant continued to act for Mr M L Neil because the information was not relevant to the subject matter of Mr M L Neil’s potential claim against the plaintiff.  The plaintiff had failed to discharge his burden of proving that the information was relevant to Mr M L Neil’s retainer of the defendant.
[20]	The defendant argued that Mr M L Neil’s claim against the plaintiff simply involved consideration of the correctness of the diagnosis made by the plaintiff in the light of a specific series of consultations and examinations of Mr M L Neil by the plaintiff.  Resolution of Mr M L Neil’s claim against the plaintiff primarily depended on an examination of the notes that the plaintiff took during each consultation.  The notes of themselves would reveal whether the plaintiff’s investigations and history taking were adequate, thorough and complete and formed a proper basis to make the diagnosis that was made by the plaintiff and whether the diagnosis was correct.  The context in which the consultations took place and … 
Conclusion
[21]	For the reasons set out below I accept the submissions of the plaintiff and I reject the submissions of the defendant.
[22]	The confidential information in the defendant’s possession reveals the following.  … 
[23]	The confidential information leads to a train of inquiry …  The information in the defendant’s possession does disclose a real conflict of interest.  It is capable of being used to the plaintiff’s detriment in the general conduct and progress of the proceeding, as well as in relation to the assessment of the strength and weakness of his case.  The defendant has been able to learn a great deal about the plaintiff.  The information is capable of having an impact on how the litigation may be conducted to the detriment of the plaintiff.  The information would be helpful to counsel cross examining the plaintiff.  As Nettle J said in Sent and Primelife Corp Ltd v John Fairfax Publication Pty Ltd (supra) at [83], the plaintiff should be free to make choices in the sure and certain knowledge that whatever he disclosed previously cannot be used against him.  He should not be required to conduct his case according to whether his former solicitors are to act against him.
[24]	It is also of the highest importance to the administration of justice that a solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put that information at risk of coming into the hands of someone with adverse interests.  The defendant started to act for Mr M L Neil against the plaintiff within six months of advising the plaintiff that ….  The appearance that a legal firm can readily change sides undermines the appearance that justice is being done.  It is important that the appearance of the integrity of the administration of justice is preserved.
Orders
[25]	I order that
1.	The defendant, whether by its directors, servants, agents or otherwise howsoever, be restrained from acting or continuing to act for Mathew Lesley Neil against the plaintiff.
2.	The defendant, whether by its directors, servants, agents or otherwise howsoever, be restrained from commencing proceedings in any court on behalf of Mathew Lesley Neil against the plaintiff.
[26]	I will hear the parties as to costs and any ancillary orders.