New South Wales Supreme Court CITATION : Grammer v Johnson [2009] NSWSC 1360 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 04/12/09 JUDGMENT DATE : 4 December 2009 JURISDICTION : Equity Division JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 4 December 2009 DECISION : Summons dismissed with costs. CATCHWORDS : EQUITY - confidential information - application by former client for injunction to restrain solicitors from acting - application based wholly on apprehension of misuse of confidential information about plaintiff's financial position - where last instructions given four years ago - where no substantial instructions given for many years - where any confidential information about financial position that solicitors did obtain was obtained fourteen or more years ago - not established that solicitors possess any relevant information or that reasonable person would have apprehension of misuse of any information LEGISLATION CITED : Petroleum (Onshore) Act 1991 CATEGORY : Principal judgment Commonwealth Bank of Australia v Kyriackou [2008] VSC 146 CASES CITED : Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561 Pinnacle Living Pty Ltd v Elusive Image Pty Limited [2006] VSC 202 Slaveski v State of Victoria [2009] VSC 540 Steven Charles Grammer - Plaintiff PARTIES : Gregory Owen Myers Johnson - First Defendant Russell John Booby - Second Defendant Bell & Johnson Solicitors Pty Limited - Third Defendant FILE NUMBER(S) : SC 3680/09 COUNSEL : Mr R W Washington - Plaintiff Mr A L Price - Defendants SOLICITORS : Thomas Henry Bray - Plaintiff Piper Alderman - Defendants IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J FRIDAY 4 DECEMBER 2009 3680/09 STEVEN CHARLES GRAMMER v GREGORY OWEN MYERS JOHNSON & 2 ORS JUDGMENT 1 This is an application by Mr Grammer for injunctive relief on a final basis. 2 The natural personal defendants are Mr Johnson and Mr Booby. Each is a solicitor practising in Narrabri. The corporate defendant, Bell & Johnson Solicitors Pty Ltd (which I shall call "Bell & Johnson"), is an incorporated law practice of which Mr Johnson and Mr Booby are the principals. It is the successor in practice to a partnership of like name of which Mr Johnson and Mr Booby were the members. 3 Mr Grammer seeks, in terms of the summons, to have all three defendants restrained from "acting in the capacity of legal practitioners in proceedings 2008/55 in the Mining Warden's Court of New South Wales" and from "acting in the capacity of legal practitioners for either Dean Von Harten or Ronald Von Harten in any matter touching upon or concerning Steven Charles Grammer, or any company of which Mr Grammer is a director, or any trust in which Mr Grammer has any beneficial interest in". 4 The emphasis is really, however, on the remaining aspect of the particular Mining Warden's Court proceedings in which, following an appeal to the Common Law Division of this court, there are outstanding questions of costs to be determined at first instance. 5 Mr Grammer apparently commenced the proceedings in the Mining Warden's Court in December 2008 in which Namoi Valley Aqua Farming Pty Ltd (which I shall call "Namoi") sought an assessment of compensation under the Petroleum (Onshore) Act 1991 against another company. Mr Grammer is, or was, one of three directors of Namoi and the holder of two out of the four issued shares in Namoi, as well as being the holder of 55 per cent of the units of a unit trust of which Namoi is the trustee. 6 Mr Dean Von Harten and Mr Ronald Von Harten are, or were, the other directors of Namoi, the holders of the other units of the unit trust and the holders, as to one each, of the remaining shares in Namoi. 7 It appears that the Messrs Von Harten had misgivings about the commencement in the Mining Warden's Court by Namoi at the instigation of Mr Grammer. On 30 June 2009, Mr Bailey, mining warden, granted leave to the Messrs Von Harten to be joined as defendants to the proceedings brought by Namoi. That order was made on a notice of motion by which the Messrs Von Harten also sought an order that the proceedings brought by Namoi be dismissed or permanently stayed as an abuse of process and an order that, if any costs order were made against Namoi in those proceedings, then either or both of Mr Grammer and Namoi's solicitor should indemnify Namoi and the Messrs Von Harten against all liability for those costs; also an order that Namoi or its solicitor or both pay the costs of the Messrs Von Harten. 8 Following the appeal to which I have referred, it is these costs questions outstanding on the application of the Messrs Van Harten that remain for determination by the Mining Warden's Court. 9 Bell & Johnson are the solicitors for the Messrs Von Harten in the Mining Warden's Court proceedings. Mr Booby appeared for them on the hearing of the notice of motion to which I have referred. 10 Mr Grammer considers himself to have an equitable right to have Bell & Johnson and its principals restrained not only from continuing to act for the Messrs Von Harten in the residue of the particular proceedings in the Mining Warden's Court but also on the much wider basis stated in the summons, that is, in any matter touching upon or concerning Mr Grammer, or a company of which he is a director or a trust in which he has a beneficial interest, so that neither Bell & Johnson nor either of the individual solicitors would be free to act for one of the Messrs Von Harten in, for example, drawing a will leaving a generous legacy to Mr Grammer. 11 The equity Mr Grammer asserts is said to come from past associations. He does not claim to be a current client of Bell & Johnson, or either of the individual solicitors. He refers in his affidavit to a number of occasions on which the predecessor partnership, and Mr Johnson in particular, acted for him, his wife and companies of his. 12 The most recent matter about which Mr Grammer gives evidence was in 2005 when the partnership acted for Mr Grammer's wife in a dispute with the local council over rates. A number of other matters going back to 1991 are also detailed by Mr Grammer. 13 Mr Grammer further says that for many years, up to July this year when they were uplifted, his will and that of his wife, plus certificates of title, were held in safe custody first by the predecessor partnership and later by Bell & Johnson. 14 Mr Grammer was cross-examined about the matters in which the partnership acted for him and his associates on various occasions up to 2005. He confirmed instructions were last given by him, as distinct from his wife, in relation to a proposed sale of shares in Namoi by a Mr Fenner. This was in 2003 or perhaps late 2002. Mr Johnson prepared some form of draft document on Mr Grammer's instructions but did not progress beyond that when Mr Grammer chose to instruct another Narrabri solicitor, Mr McHugh. 15 Mr Grammer also confirmed in cross-examination that he never sought to instruct Bell & Johnson in relation to the Mining Warden's Court proceedings and that he gave the defendants no information concerning that matter. He confirmed that disputes with the Messrs Von Harten had emerged before the Mining Warden's Court proceedings were instituted and that he did not seek to retain Bell & Johnson in that connection then, or at any later stage, and gave them no relevant information. 16 Mr Johnson confirmed that the predecessor partnership acted for Mr Grammer and his wife in a number of matters in earlier years. He referred in his affidavit to matters between 1991 and 1997 for which files have since been destroyed, no doubt in the ordinary course of records management. 17 There is a question about the preparation of the trust deed for the unit trust of which Namoi is the trustee. I am satisfied on the evidence that the predecessor firm prepared that trust deed in 1995. The "Bell & Johnson" name appears on the cover sheet. On the balance of probabilities, I find that it was Mr Bell, Mr Johnson's former partner who has since died, who acted in that matter. I say this because there is a letter of February 1995 bearing Mr Bell's reference to Mr Grammer's accountants reporting that the deed had been sent for stamping. Also, Mr Johnson gave evidence that he has no recollection of having dealt himself with the preparation of the trust deed . 18 The bases on which a court may intervene to restrain a lawyer from acting against a former client are well established. There is a useful discussion of the matter in the judgment of Brereton J in Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561. In Victoria, the principles were succinctly stated by Whelan J in Pinnacle Living Pty Ltd v Elusive Image Pty Limited [2006] VSC 202 in terms subsequently approved by Judd J in Commonwealth Bank of Australia v Kyriackou [2008] VSC 146 and, in just the last few days, by Pagone J in Slaveski v State of Victoria [2009] VSC 540 (27 November 2009). 19 Whelan J put the matter in terms contained in numbered propositions 1, 2 and 3 at paragraph 14 of his judgment: "(1) The Court will restrain a legal practitioner from continuing to act for a party to litigation if a reasonable person informed of the facts might reasonably anticipate danger of misuse of confidential information of a former client, and that there is a real and sensible possibility that the interest of the practitioner in advancing the case in litigation might conflict with the practitioner's duty to keep the information confidential and to refrain from using that information to the detriment of the former client. (2) The danger of misuse of confidential information is not the sole touchstone for curial intervention where a solicitor acts against a former client. There is also an independent equitable obligation of loyalty which forbids a solicitor acting against a former client in the same or a closely related matter. Intervention may also be justified on this ground in the exercise of a Court's supervisory jurisdiction over its own officers. (3) There is an overriding jurisdiction to intervene so as to protect the due administration of justice arising where a reasonable informed member of the public would conclude that solicitors should be prevented from acting." 20 I approach the present case on the basis that Mr Grammer, and perhaps Namoi, should be treated as former clients of the defendants, that is the incorporated law practice, Mr Johnson and Mr Booby. It may be that technically neither was ever a client of the incorporated law practice which has existed only since August 2007. Mr Grammer's evidence is that he, or his associates, last gave instructions in 2005 which is when the predecessor partnership still conducted the practice. Retention of a deed packet in safe custody is not, to my mind, sufficient to keep alive a client relationship in the sense relevant for present purposes. 21 Mr Washington's submissions on behalf of Mr Grammer were expressly confined to the first of the bases of curial intervention referred to in the extract from Whelan J's judgment to which I have referred, that is, the aspect concerning protection of confidential information of a former client. There was no reliance on either proposition 2 or proposition 3 as stated by Whelan J. 22 In taking that approach, Mr Washington emphasised that the live issue in the Mining Warden's Court is one of liability for costs and, in particular, whether costs orders should be made against Mr Grammer personally. It follows, so it was submitted, that Mr Grammer's financial affairs and financial capacity are, in the particular context, a matter of significance, in that someone seeking a costs order against Mr Grammer might be improperly advantaged if confidential information about his finances were at the disposal of that person or even if there were a well-based apprehension that that might be so. 23 The problem with the submission is that there is no evidence from which the court can infer that Bell & Johnson or Mr Johnson or Mr Booby has any confidential information today about Mr Grammer's financial affairs and financial capacity as they now exist. 24 Three particular matters were, however, raised as examples of why such a finding should be made. The first was the sale of a property in Narrabri in 1996 on which the predecessor firm acted for Mr Grammer. This retainer, it was said, put the predecessor firm in possession of information about the price received by Mr Grammer (which, I might say, was probably stated in the transfer lodged at the Land Tiles Office and available for public inspection); and more pertinently, so it was submitted, the solicitors would have obtained information about where the proceeds of sale went. 25 The second example was the purchase of a piece of land by Mr Grammer and his wife in 1992. The submission was that instructions about how the purchase was financed would have resulted in communication to the firm of confidential information about Mr Grammer's finances. 26 The third example concerned wills. The partnership acted for Mr Grammer and his wife on the preparation of wills. This was also in 1992. It was said that, in the course of taking instructions for a will, a solicitor must obtain some information about the testator's financial affairs. This may readily be accepted as so, to a greater or lesser extent, depending on the dispositions the testator wishes to make. For example, if the will says in effect, "I leave everything to my wife but if she is not living at my death then to my children equally", the financial inquiry and analysis the solicitor needs to make is minimal. 27 The case Mr Grammer seeks to make is conjectural. There is no sound basis for any finding that confidential information about Mr Grammer's financial affairs was communicated to the solicitors' firm in the course of any of the retainers mentioned. But even if it was, the fact is that it was information that was current at the time of each respective retainer: 1996, in the case of the sale of the Narrabri property; and 1992 in both the case of the purchase of the land and the case of the drawing of the wills. 28 There was no real suggestion that confidential financial information was communicated on any later occasion - or at least the only such suggestion that was advanced related to the establishment of the Namoi trust, the suggestion being that the proportionate interests of the unit holders was confidential. That cannot be so, since Mr Grammer expressly refers to the matter in his own affidavit in these proceedings. 29 A reasonable person informed of the facts about the past relationship between Mr Grammer, the predecessor firm and members of that firm, would not reasonably anticipate danger of misuse of confidential information of Mr Grammer. That reasonable person, in possession of the evidence and the submissions that have been made, would recognise immediately that no information about Mr Grammer's financial affairs and financial capacity had been obtained by these particular solicitors from him for many years. 30 Faced with the suggestion that information was obtained or might have been obtain in 1992 or 1996, the reasonable person would say, "That is a very long time ago; and if I think back over my own financial affairs, I see that my position today bears no resemblance at all to what it was in 1992 or 1996." In short, such information as may have been obtained about financial affairs in earlier years is of no continuing relevance or currency today, and could not be apprehended to be so. 31 Mr Grammer has failed to establish that the defendants today possess any confidential information of Mr Grammer such that there could be any conceivable possibility of an apprehension that their duties to the other parties for whom they act in the Mining Warden's Court proceedings could come into conflict with any duty of confidentiality owed to Mr Grammer. 32 The summons is therefore dismissed. [Counsel addressed on costs] 33 I order that the plaintiff pay the defendants' costs of the proceedings assessed on the party-party basis. ********** 07/12/2009 - Incorrect name of first defendant - Paragraph(s) HEADING DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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