GARRY F S BOYCE AND THE PERSONS NAMED IN THE ANNEXED SCHEDULE T/AS 'HUNT AND HUNT LAWYERS' vy GOODYEAR AUSTRALIA LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY AP, GILES AND SIMOS AJJA 16 September 1996, 16 September 1996 [1996] NSWCA 63 Solicitors — information obtained acting for client in defending asbestos claims — client's defence conducted by insurer — term of policy that client to provide information to insurer — in later proceedings solicitors act for insurer against client — information relevant to dispute — client seeks access to information, solicitors claim legal professional privilege on behalf of insurer — application to restrain solicitors from acting or disclosing material. Held no answer to application that client required to provide information to insurer. Duty to client goes beyond not disclosing confidential information, includes not using client's information in interests of insurer and against interests of client. Mallesons Stephen Jacques v KPMG Peat Marwick (1994) WAR 357 referred to. Giles AJA Ex tempore Goodyear Australia Ltd (Goodyear) employed Mr Jeal from 1957 to 1987. Mr Jeal worked in a factory at Camellia adjacent to a factory of James Hardie & Co Ltd (Hardie). Goodyear was relevantly insured by National Employers Mutual General Insurance Association Ltd from 1942 to 1958 and from 1962 to 30 June 1983, and from 30 June 1983 was relevantly insured by Switzerland Insurance Co Ltd. In 1994 Mr Jeal brought proceedings in the Dust Diseases Tribunal of New South Wales against Goodyear and Hardie, alleging that he was exposed during his employment to asbestos dust and fibre from Hardie's factory and thereby contracted pleural mesothelioma. National Employers Mutual General Insurance Association Ltd had gone into liquidation, and the entity responsible in its place became Insurers Guarantee Fund-National Employers Mutual General Insurance Association Ltd (NEM). The liabilities of Switzerland Insurance Co Ltd had been assumed by Manufacturers Mutual Insurance Ltd (MMI). Each of NEM and MMI denied liability to indemnify Goodyear in respect of Mr Jeal's claim. Accordingly, Goodyear cross-claimed in the Dust Diseases Tribunal not only against Hardie for contribution or indemnity pursuant to the Law Reform (Miscellaneous Provisions) Act 1946, but also against NEM and in the alternative MMI for indemnity under the insurance. The denials of liability by NEM and MMI turned on a dispute over whether Mr Jeal was last exposed to asbestos prior to 30 June 1983 or after 30 June 1983, being the same matter as arose in Mr Jeal's claim itself. Messrs Hunt & Hunt were acting for NEM in defending the cross-claim. The hearing of the proceedings in the Dust Diseases Tribunal, which had been expedited because of Mr Jeal's state of health, was fixed for three days commencing on 16 May 1995. On 11 May 1995 Goodyear filed a summons in the Equity Division of this Court, in which it claimed a declaration that Hunt & Hunt had a conflict of interest in acting for NEM in the proceedings in the Dust 2 UNREPORTED JUDGMENTS Diseases Tribunal and an order restraining it from so acting or from disclosing to any person other than Goodyear or its lawyers what was described as the Privileged Material. The summons was heard on 12 May 1995 by Windeyer J, who made the orders claimed with a qualification of no present significance. Hunt & Hunt appealed from his Honour's decision, and this is the hearing of the appeal. Since the proceedings in the Dust Diseases Tribunal are well finished, one may wonder what the point of the appeal is. We were told that his Honour's decision is being used as a vehicle to prevent Hunt & Hunt acting for NEM in other proceedings. Just whose interest it is to prosecute the appeal has not been indicated, but the suggestion was that decision of the appeal would guide for the future. That is unlikely as each case will inevitably depend on its own facts. However, in the circumstances it is appropriate that we determine the appeal. Hunt & Hunt had acted. for Goodyear, that is, with NEM conducting the defence as Goodyear's insurer, in other proceedings in the Dust Diseases Tribunal in which employees alleged that they contracted asbestos-related diseases as a result of their employment. His Honour found that in the course of so acting Hunt & Hunt had gained access to information and documents, and had obtained witness statements from employees and former employees of Goodyear, "in circumstances in which legal professional privilege and a duty of confidentiality arose." The essence of His Honour's decision lies in what he then said - "Goodyear's present solicitors have sought access to such material which it claimed and which it is not denied has fallen into the hands of Messrs Hunt & Hunt and that access has been denied, it seems, on the grounds of privilege. That seems to me to be the end of the matter. The documents were obtained as solicitors for Goodyear albeit that the insurer of Goodyear was conducting the litigation. Nevertheless, the law is clear that the client was Goodyear and the privilege was that of Goodyear. That privilege in respect of those documents is now being claimed against that client and that seems to be an impossible situation. Certainly, as Mr Hall says, the question at issue is a question of fact but so are many questions in litigation. But solicitors cannot, having obtained as solicitor for a client information and documents, at least some of which appears to be confidential and related to the facts in issue, seek to use or at least appear to threaten to use that information against the client and claim in some way privilege from production of such documents." The information, documents and witness statements were the Privileged Material. In correspondence between Goodyear's solicitors in the Dust Diseases Tribunal proceedings and Hunt & Hunt, the latter maintained that knowledge of Goodyear's premises or their previous contact with witnesses did not create a real or potential prejudice to Goodyear's interests in those proceedings. Behind what his Honour said in the passage just set out was evidence that Goodyear's solicitors in the Dust Diseases Tribunal proceedings had sought from Hunt & Hunt access to the Privileged Material for the purposes of the conduct of those proceedings and Hunt & Hunt had refused to provide access. On 9 May 1995 Goodyear's solicitors had told Hunt & Hunt that they would subpoena the witness statements, being statements taken from Goodyear's employees and former employees at an earlier time dealing with their knowledge of exposure to asbestos during their employment by Goodyear, and Hunt & Hunt had responded that it would object to disclosure of the statements on the ground of privilege. \ARRY F S BOYCE AND THE PERSONS NAMED IN THE ANNEXED SCHEDULE T/AS 'HUNT AND HUNT LAWYERS' v GOODYEAR AUSTRALIA LTD (Giles AJA) On this appeal Hunt & Hunt submitted that Windeyer J fell into error by failing to take into account the terms of the statutory form of insurance policy and the relative positions of NEM and Goodyear in the earlier proceedings in the Dust Diseases Tribunal and in the proceedings brought by Mr Jeal in that tribunal. It postulated and accepted a test of whether there existed or might be reasonably anticipated to exist a danger of a breach of duty not to communicate confidential information. The expression of this test was taken from Rakusen v Ellis Munday & Clarke (1912) 1 Ch 831 at 845. But Hunt & Hunt said that where condition four of the statutory form of policy obliged Goodyear to "give all necessary information and assistance and forward all documents to enable the Insurer to settle or resist any claim as the Insurer may think fit," the Privileged Material was in all probability not confidential information as between Goodyear and NEM. Further, it said that in the earlier proceedings in the Dust Diseases Tribunal there was no issue of entitlement to indemnity under the insurance, apparently meaning that where the issue was the different issue of indemnity under the insurance confidentiality fell away. In the result, according to the argument, there was no information in the possession of Hunt & Hunt which NEM did not know of or was not entitled to know of, and so the test could not be satisfied. In oral submissions this was put perhaps slightly differently, at the more factual level that given the narrowness of the issue, namely whether or not the last exposure occurred before or after 30 June 1983, it was unlikely that the Privileged Material would realistically contribute one way or the other to the determination of that issue, and again there was no question of disclosure of confidential information. If there was a possibility that some of the Privileged Material did not fall within condition four of the statutory form of policy, according to the argument it was for Goodyear to take the possibility from speculation to proof and the evidence before Windeyer J had been insufficient to do that. In my opinion the argument on the appeal misses the mark. The issue as between Goodyear and NEM in Mr Jeal's proceedings in the Dust Diseases Tribunal, although an issue of indemnity under the insurance, turned on the same dispute as an issue between Mr Jeal, Goodyear and Hardie, namely whether Mr Jeal was last exposed to asbestos prior to 30 June 1983 or after that date. It was not suggested that the Privileged Material was irrelevant to that dispute, and indeed despite what was said so earnestly this morning its potential relevance was clear enough, and Hunt & Hunt was saying that the privileged material was confidential to NEM as between Goodyear and NEM. It was saying this because it was asserting legal professional privilege as the ground for refusal to produce that material to Goodyear. So Hunt & Hunt was withholding from Goodyear information which on its argument on this appeal was Goodyear's information, even though the argument suggested a sense in which it was also NEM's information, and there was at the least a real prospect of Hunt & Hunt using that information in the interests of NEM and against the interests of Goodyear. That remains, in the words of Windeyer J, an impossible situation. A solicitor's duty to a former client goes beyond not disclosing confidential information. In one of the cases cited by Hunt & Hunt, Mallesons Stephen Jacques v KPMG Peat Marwick (1994) WAR 357, Ipp J referred at 362-3 to the test of - 4 UNREPORTED JUDGMENTS ".,. a real and sensible possibility that the solicitor's interest in advancing the case of the new client might conflict with his duty to keep information given to him by the former client confidential or to refrain from using that information to the detriment of the former client". At the heart of impermissible disclosure of information is prejudice to the client, and prejudice to the client may come about by impermissible use of the information otherwise than by disclosure. It is present when the information is denied to the client but made available to the client's adversary for which the solicitor is acting, and it may be present if the solicitor acts against the client even if there not be overt disclosure. So much is demonstrated, if demonstration be needed, in the valuable article by Dr Paul Finn (as his Honour then was) in the publication of the Legal Research Foundation, Professional Responsibility, in which his Honour presented a paper entitled "Conflicts of Interest and Professionals". Hunt & Hunt's submission rather recognised the difficulty in the argument when it was said that it was almost certainly the case that the claim of legal professional privilege made by Hunt & Hunt was incorrect and that the remedy was to have the claim of privilege disallowed. On the evidence before Windeyer J the claim to legal professional privilege was there, and it was for the Dust Diseases Tribunal to rule on it if called on to do so. The fact that the claim was made was what mattered before Windeyer J. In the situation before his Honour, what called for the orders he made was the real prospect to which I have earlier referred, and his Honour did not err in making the orders. In my opinion, therefore, the appeal should be dismissed with costs. Priestley AP I agree. In general where a solicitor has acted for a client in a matter, the solicitor should not act against that client in a later matter involving a factual substratum having any significant overlap with the factual substratum in the earlier matter. The generality of this rule is subject to agreement to the contrary between the client and the solicitor and to the detail of the facts of particular cases. For the reasons given by Giles AJA I do not think this case falls outside the general rule. I agree with the orders he proposes. Simos AJA I agree with Giles AJA. Priestley AJA The orders are as indicated by Giles AJA. Appeal dismissed with costs. Counsel for the appellants: Mr C Hoeben QC Solicitors for the appellants: Messrs Hunt & Hunt Counsel for the respondent: Mr J L Sharpe Solicitors for the respondent: Messrs Mallesons Stephen Jacques