Supreme Court New South Wales Medium Neutral Citation: Borgese v Cater & Blumer Pty Ltd t/as Cater & Blumer (No 3) [2017] NSWSC 92 Hearing dates: 15 and 16 February 2017 Decision date: 17 February 2017 Jurisdiction: Common Law Before: N Adams J Decision: (1) The plaintiff's second application for leave to file a further amended statement of claim is refused. (2) The defendant's motion for summary dismissal is allowed. (3) The plaintiff is to pay the defendant's costs of the motions. (4) The plaintiff is to pay the defendant's costs of the proceedings on the ordinary basis. (5) The defendant has leave to approach my Associate within 14 days should it seek variation of Order 4. Catchwords: PRACTICE AND PROCEDURE – second application for leave to file further amended statement of claim –breach of confidence alleged for the first time – lack of specificity in pleadings of nature of confidential information – prejudice to the parties - application refused PRACTICE AND PROCEDURE - application to dismiss proceedings because no reasonable cause of action disclosed Legislation Cited: Family Provision Act 1982 (NSW) Uniform Civil Procedure Rules 2005 (NSW), r 13.4(1)(b) Cases Cited: Aon Risk Services Australia Ltd v The Australian National University (2009) 239 CLR 175; [2009] HCA 27 Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27 Belan v Casey [2002] NSWSC 58 Borgese v Cater & Blumer Pty Ltd t/as Cater & Blumer [2016] NSWSC 1252 Borgese v Cater & Blumer Pty Ltd t/as Cater & Blumer (No 2) [2017] NSWSC 79 Borgese v Papasidero [2006] NSWSC 407 Clarke v State of New South Wales (No.4) [2015] NSWSC 1054 Corrs Pavey Whiting and Byrne v Collector of Customs (Vic) (1987) 14 FCR 434; [1987] FCA 266 Duchess of Argyll v Duke of Argyll [1967] CH 302 General Steel Industries v Commission for Railways (1964) 112 CLR 125; [1964] HCA 69 Kallinicos v Hunt [2005] NSWSC 1181 LGS v Barbagallo (No 3) [2012] NSWSC 1099 Mancini v Mancini [1999] NSWSC 800 Marshall v Prescott [2015] NSWCA 110 Prince Jefri Bolkiah v KPMG [1999] 2 A.C. 222 Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248 Category: Procedural and other rulings Parties: Domenico Borgese (Plaintiff) Cater & Blumer Pty Ltd t/as Cater & Blumer Solicitors (Incorporating Ian Denis Maguire t/as Maguire & Martin Solicitors) (Defendant) Representation: Counsel: Ms J Merkel (Plaintiff) Mr T Faulkner SC (Defendant) Solicitors: Margiotta Solicitors & Attorneys (Plaintiff) Meridian Lawyers (Defendant) File Number(s): 2012/138861 Judgment 1. These proceedings brought against a firm of solicitors have had a troubled procedural history. By statement of claim filed on 1 May 2012 proceedings were brought against the defendant for professional negligence. An amended statement of claim was filed on 25 March 2015 ("ASOC"). On 9 September 2016, Harrison J refused the defendant's application to strike out the proceedings for want of due despatch. In so doing, his Honour observed that he was unable to identify any cause of action against the defendant in negligence: Borgese v Cater & Blumer Pty Ltd t/as Cater & Blumer [2016] NSWSC 1252. 2. A final hearing was listed to commence before me on 13 February 2017 with an estimate of five days. On that date counsel for the plaintiff sought leave to file a further amended statement of claim significantly changing the nature of the claim brought from one of negligence to one of breach of fiduciary duty ("the first application"). That application was heard on 13 February 2017. On 15 February 2017, I refused the plaintiff's first application: Borgese v Cater & Blumer Pty Ltd t/as Cater & Blumer (No 2) [2017] NSWSC 79. 3. During the hearing of the first application, counsel for the plaintiff foreshadowed that she had become aware of certain documents in court that day that required consideration of whether the plaintiff had a cause of action for breach of confidence. On 14 February 2017, the plaintiff's solicitor wrote to my Associate by email, with the concurrence of the defendant's solicitor, to foreshadow that an application would be made in court on 15 February 2017 to file a further amended statement of claim ("FASOC") pleading breach of confidence for the first time ("the second application"). 4. On 15 February 2017, two applications were before me. In addition to the plaintiff's second application, the defendant moved on a notice of motion filed on 16 September 2016 (and stood over generally) to have the proceedings summarily dismissed pursuant to r 13.4(1)(b) of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). 5. The material before me on these two applications includes that which was before me on the previous application. In addition, the defendant tendered correspondence between the parties' respective solicitors in 2013 concerning documents produced on discovery. 6. The background and procedural history of this matter is set out in detail in my previous judgment as well as in a judgment of Harrison J. There is no need for me to set out all of the events giving rise to these proceedings which, on the plaintiff's version, date back to 1973. It is sufficient for the purposes of determining these applications that I confine my consideration to the relevant events that occurred between 2000 and 2006. Background 1. Maguire & Martin Solicitors in Leeton acted for the plaintiff's family on a number of occasions between 1976 and 2006. That firm was incorporated into the defendant in 2000. 2. In 1999 the plaintiff and his wife separated. There were three children of the marriage. In March 2000 the defendant was retained by the plaintiff in proceedings in the Family Court of Australia ("the family law proceedings") commenced by the plaintiff's estranged wife seeking orders for adjustment of interests in the property of the parties and in respect of the children of the marriage. Mr Geddes, a solicitor of the defendant, represented the plaintiff in those proceedings until mid-2001. 3. In 2003 the plaintiff's father died, leaving the plaintiff one-sixth of his estate. The plaintiff has five sisters. The plaintiff brought proceedings under the Family Provision Act 1982 (NSW) to claim a greater share of his father's estate ("the Family Provision proceedings"). Although he was initially legally represented in those proceedings, by the time of the hearing before Young CJ in Eq on 2 May 2006 he was unrepresented. Mr Ian Maguire of the defendant acted for the executrix in those proceedings until January 2005, at which time he retired from legal practice. Carriage of the matter was then handed over to Mr Martin of the defendant. 4. The plaintiff swore an affidavit in the Family Provision proceedings on 27 September 2004. In paragraphs [33] to [35] therein he stated the following: "33. As a result of the divorce, and ongoing family disputes I remained in a state of depression and could not survive without government benefits. I payed out my child support in one lump sum to my former wife and as a result have little to survive upon. 34. At present I am now living in Melbourne to prevent any family friction between myself, my sisters and the defendant. I am unemployed and was receiving unemployment benefits. I have medical certificates that declare me too ill to work. 35. I am granted approximately $450 a fortnight and pay $172 a fortnight in rent. I am currently draining assets to survive, as work is very difficult to come by because I have had no other experience apart from farming. I have had to sell all of my shares and the residue from my divorce is a necessity which assists my financial situation." 1. In those proceedings the plaintiff also disclosed in cross-examination that he had obtained between $100,000 and $140,000 as a result of the property settlement with his former wife. 2. During preparation of the proceedings in September 2005, the defendant caused the plaintiff's family law file to be transferred from the Family Court to the Supreme Court in connection with the Family Provision proceedings. 3. On 2 May 2016, Young CJ in Eq delivered his judgment in the Family Provision proceedings. The plaintiff was successful in that it was ordered that he receive half of his father's estate rather than one-sixth: Borgese v Papasidero [2006] NSWSC 407. At [31] his Honour observed: "It is a difficult case and, I think, a borderline case. Here, we have, as Mr Hadley has put, a man who does not work, who has had a marriage settlement where he received $100,000, has left the family property somewhere between 10 and 15 years ago, and has been left one sixth of the estate. He has five siblings and not only has he been left one sixth of the estate, but his children between them have also been left a further one sixth". 1. His Honour also observed that the property would have to be sold and that, on the basis of the information before him, no family member would be in a position to buy it. 2. In June 2006 the plaintiff's solicitors were given three days' notice of the proposed sale of the family farm. The plaintiff contacted the defendant and informed Mr Martin that he did not wish the farm to be sold. Despite this, it was subsequently sold to one of the plaintiff's sisters on 24 June 2006. The Family Court documents 1. The plaintiff's application at this late stage to bring an action against the defendant based on a breach of confidence relies upon documents pertaining to the family law proceedings discovered in the present proceedings. Counsel for the plaintiff informed the Court on 13 February 2017 that she had only become aware of those documents during the course of that day. She tendered five documents said to be relevant to this issue. The first of these was the plaintiff's financial statement containing financial information provided by the plaintiff to the Family Court in about 2000. That statement was sworn before Mr Geddes (document 344). The other documents were the plaintiff's 1999 tax return (document 371), the plaintiff's AMP endowment insurance and personal superannuation plan dated 5 August 1999 (document 381), minutes of the Family Court proposed consent orders in 2001 (document 352), and Family Court conciliation particulars dated 28 March 2003 (document 350). (These are the document numbers to which the FASOC, extracted below at [22], refers). 2. The defendant relies upon correspondence between the parties in 2013 to establish that the material described at [16] above has in fact been available to the plaintiff's solicitor and the plaintiff's then counsel since March 2013. (It is to be noted that the plaintiff's current counsel only came into the matter in late 2016). Correspondence on 29 January 2013 refers to discussions between the plaintiff's counsel and the defendant's counsel with respect to the plaintiff's proposed discovery categories. One of the proposed categories is described as "all documents constituting the files of the law firm Cater & Blumer Solicitors relating to the Family Law matter of Giuseppe Borgese and Maria Leonarda Borgese". The unverified list of documents was provided to the plaintiff's solicitor on 26 March 2013 and the verified list of documents was sent a few days later. Both documents contained all of the documents described at [16] above. 3. Based on the material before me I am satisfied that the documents tendered on behalf of the plaintiff on 13 February 2017 said to disclose for the first time an equitable cause of action based on breach of confidence have been available to the plaintiff's solicitor since March 2013. The pleadings 1. The ASOC filed on 25 March 2015 is the current pleading before the Court. Counsel for the plaintiff conceded during the course of the first application that, in the event that the first application was unsuccessful, the only remaining aspect of the claim would be the allegation that the defendant breached his duty of loyalty when it acted for the executrix in the Family Provision proceedings. During the hearing of the second application, Ms Merkel informed the Court that she did not have instructions to concede that, if this second application were unsuccessful, there was no remaining cause of action that could proceed to a hearing. 2. The only reference to any cause of action based on the defendant's conduct in acting for the executrix in the Family Provision proceedings in the ASOC is the highlighted portion of the particular numbered 11, which was one of the 17 "Particulars of Negligence" pleaded in the ASOC. Particular 17 is in these terms: "Failing to cease to act for the Estate of the late Giuseppe Borgese after the plaintiff commenced proceedings in the Supreme Court of New South Wales in Matter No 383 of 2004 as the second defendant had a conflict of interest having acted for the plaintiff's deceased father Giuseppe Borgese, the plaintiff's deceased mother Carmela Borgese and the plaintiff in the preparation of a Partnership Agreement and subsequent partnership Agreements and disputes involving the plaintiff's father and the plaintiff's wife and the plaintiff's father and the plaintiff in Family Law proceedings against the plaintiff's wife Maria Leonarda Borgese" [emphasis added] 1. Thus it can be seen that the only remaining portion of the claim on foot should this second application be refused is a bare allegation of a breach of loyalty at a point in time when the defendant was no longer retained by the plaintiff. 2. In the FASOC the plaintiff relies upon an action based on breach of confidence rather than breach of loyalty, pleaded as follows: "30. Further in or about September 2000 the defendant accepted instructions to represent the plaintiff as respondent in proceedings in the Family Court of Australia commenced by Maria Borgese seeking orders for adjustment of interests in the property of the parties in respect of the children of the marriage (the Family Law proceedings). 31. The defendant was the solicitor on the record for the plaintiff in the Family Law proceedings until 20 August 2001. 32. Between September 2000 and 20 August 2001 the defendant received confidential information from the plaintiff concerning his assets, liabilities, and income, and expenditure, relationships with his wife and his children and concerning his conduct, behaviour and disposition. Particulars (a) The information contained in the plaintiff's tax return for the financial year ended June 1999 (defendant's discovered document 371), (b) Information concerning family and police matters obtained by Mackenzie and Vardenega. (c) Information concerning the plaintiff's insurance and superannuation (defendant's discovered document 381). (d) A Family Report dated 13 August 2001. (e) Maria Borgese's financial statement and affidavit. (f) The information necessary to prepare a draft minute of proposed consent orders attaching a list of the plaintiff's investments (defendant's discovered document 352). (g) Information necessary to prepare conciliation conference particulars, signed by Mr Geddes, (defendant's discovered document 350) (h) Information necessary to prepare the plaintiff's Financial Statement, sworn before Mr Geddes (defendant's discovered document 344). 33. At all material times the defendant had a duty of confidence in relation to the information mentioned in paragraph 32. 34. At all material times the defendant had a duty not to act on any matter or in any proceedings in which there was a real risk of disclosure of the information mentioned in paragraph 32. 35. At all material times the defendant had a duty not to act on any matter or in any proceedings in which there was a real risk that the information mentioned in paragraph 32 could be used in the interests of any other client of the defendant. 36. The information mentioned in paragraph 32 was material to the defence of an action for provision pursuant to the Family Provision Act 1982. 37. The information mentioned in paragraph 32 was material in the administration of the estate following the judgment of the Supreme Court of New South Wales dated 2 May 2005 including the advice to the executor with regard to the plaintiff's stated wish to purchase Farm Purchase 1143 from Benilda Papasidero in her capacity as executrix of the estate of the late Giuseppe Borgese. 38. The defendant acted in breach of the duties mentioned in paragraph 34 and 35 when it acted for the executrix in the defence of proceedings for provision that were commenced by the plaintiff in about 2004 and for Benilda Papasidero on the sale of Farm Purchase 1143 to Luciana Borgese and in breach of the duty mentioned in paragraph 33: (A) when it informed the Supreme Court of New South Wales by an affidavit sworn on 30 January 2006 that the information contained in the Family Court file for the Family Court proceedings may be pertinent to the issues in dispute in Supreme Court proceedings no.3830 of 2004 when to the knowledge of the defendant the information mentioned in paragraph 32 was held by the defendant. (B) when it instructed counsel briefed in the said Supreme Court proceedings to ask the plaintiff in cross examination to ask how much he obtained in his family law settlement. 39. The defendant's breach of duty of confidence in electing to act for the defendant in defence of proceedings pursuant to the Family Provision Act 1982 subsequently contributed to the plaintiff's disappointment and distress because he attributed his failure to receive Farm Purchase 1143 in part to the role that Mr Maguire played in the defence. 40. Further, the defendant's breach of duty of confidence contributed to the plaintiff's loss of a chance to receive Farm Purchase 1143 by order of the Supreme Court of New South Wales or by subsequent purchase from the executrix of the estate of the late Giuseppe Borgese if the amount of his family law settlement was taken into account by his Honour in arriving at his judgment." Submissions on behalf of the defendant 1. Mr Faulkner of senior counsel on behalf of the defendant submitted that the Court would deal with the defendant's motion to dismiss the proceedings pursuant to r 13.4 of the UCPR and the plaintiff's application to file a FASOC together. If leave to file the FASOC is not granted, then there would be no reasonable cause of action and, consequently, the proceedings should be summarily dismissed under r 13.4(1)(b) of the UCPR. Mr Faulkner submitted that the FASOC also discloses no reasonable cause of action. He relied upon a number of arguments in support of this latter submission. 2. First, he submitted that the FASOC is deficient because it does not plead the confidential information with specificity as required by the authorities. There is no identification therein of what the confidential information is; it is not sufficient that the pleading state where one would look to find the confidential information. In relation to the present case, for example, it is not sufficient merely to refer to a document such as a tax return without specifying the information therein that is said to be confidential. In support of this submission Mr Faulkner relied upon the judgment of McDougall J in LGS v Barbagallo (No 3) [2012] NSWSC 1099, in particular at [88] – [106]. He also relied upon the decisions in Mancini v Mancini [1999] NSWSC 800, Marshall v Prescott [2015] NSWCA 110, Belan v Casey [2002] NSWSC 58 and Kallinicos v Hunt [2005] NSWSC 1181. 3. Mr Faulkner submitted that it is necessary to particularise confidential information with specificity so that a defendant can explore the circumstances in which the information was provided and subsequently used in order to discover whether an action for breach of confidence can be sustained. One of the items of confidential information particularised in the plaintiff's FASOC is described as "information concerning family and police matters obtained by Mackenzie and Vardenega". Mr Faulkner submitted that nothing is known about that information other than it concerns family and police matters. It is not clear whether the defendant and Mr Maguire had pre-existing knowledge of such matters, on which they were free to draw without being in breach of an obligation of confidence, from their previous association with the Borgese family. It was submitted that the need to specify the relevant confidential information is not a pleading point but an element of the cause of action sought to be made out by the plaintiff. 4. Secondly, Mr Faulkner submitted that the FASOC alleges that the defendant owed duties to the plaintiffs that are not known to the law. Paragraphs 33 and 34 of the FASOC (see above at [22]) allege a duty "not to act on any matter or in any proceedings in which there was a real risk of disclosure of the [confidential] information…" and a duty "not to act on any matter or in any proceedings in which there was a real risk that the [confidential] information…could be used in the interests of any other client of the defendant." Mr Faulkner submitted that these allegations conflate the duty of loyalty and the duty of confidence: He relied upon the statement of principle in Marshall v Prescott at [51] that the prohibition is on disclosure and misuse. 5. It was submitted that the instructions given to the defendant in the Family Court proceedings did not have the necessary quality of confidence if the defendant had the information from another source. 6. Further, Mr Faulkner submitted that in its current form, the FASOC does not disclose a cause of action that has as an ingredient the causation of loss. He submitted that the FASOC pleads conclusions, rather than the material facts that are said to warrant the drawing of those conclusions. There are no material facts alleged capable of demonstrating causation of loss. 7. Finally, it was submitted on behalf of the defendant that the allegations in the FASOC cannot be defended at this hearing because to do so would require a deal of further enquiry on the part of the defendant. Submissions on behalf of the plaintiff 1. With respect to the need for particularity in pleadings alleging breach of confidence, Ms Merkel of counsel on behalf of the plaintiff submitted that the authorities upon which the defendant relied (with the exception of Marshall v Prescott) were cases concerning injunctions. She submitted that such cases may tend to excite concerns about particularity in ways that damages or compensation cases do not by reason of the consequences of breach of an injunction. By contrast, the purpose of pleadings is to put the defendant on notice of the case that it is required to meet. 2. Ms Merkel submitted that each of the particulars averred in the FASOC in relation to breach of confidence are compilations. The documents on which those compilations are based are among the discovered documents and therefore the defendant would be in a position to access them. 3. It was submitted that it would be very unusual to strike out a claim for equitable compensation for breach of confidence for lack of sufficient specificity at the pleading stage. Ms Merkel pointed to the decision in Duchess of Argyll v Duke of Argyll [1967] CH 302, in which the defendant was injuncted from publishing the matrimonial confidences of the plaintiff. She submitted that in a matter such as that you would not expect the pleading to set out matrimonial secrets with particularity. Ms Merkel also relied upon pages 1168-9 and page 1184 of Meagher, Gummow & Lehane, Equity Doctrines and Remedies (5th ed., LexisNexis Butterworths, 2015). 4. Ms Merkel did not accept the defendant's description of the duties averred in [34] and [35] of the ASOC as novel, submitting that they are the basis for injunctions. She conceded that she was not able to take the Court to any authority in which breach of such duties had resulted in compensation. However, she submitted that breach could sound in damages for negligence, the damage to the plaintiff having occurred after the family provision proceedings. 5. As for the four criteria summarised by McDougall J in LGS v Barbagallo (No 3) said to be essential to a claim for breach of confidence (see below at [38]), Ms Merkel submitted that there was an expectation of confidentiality in the present solicitor/client context. She conceded that the plaintiff has no direct evidence of unauthorised use; rather, the plaintiff seeks to establish unauthorised use of the confidential information by inference. She submitted that there is an inference that the solicitor acting for the executrix in the Family Provision proceedings knew what was in the Family Court file before obtaining it and knew that it would be of assistance to the executrix's case, because to have obtained the file without knowing what was contained in it would have been a risk. 6. Ms Merkel submitted that the loss suffered by the plaintiff is the distress caused to him by the defendant's alleged disclosure of confidential information, in circumstances where the defendant was bound to observe the high ethical duties of a solicitor. The plaintiff does not need to establish that the defendant had profited from the breach; the distress caused to him by the knowledge that the defendant breached his confidence would be sufficient. The plaintiff is entitled to equitable compensation such as would place him in the position that he would have occupied had the breach not occurred. Consideration 1. There are two bases upon which this second application for leave to amend could be refused; namely, on the basis that the FASOC does not disclose a cause of action and/or based on principles of prejudice and case management. 2. I turn first to consider whether the FASOC satisfies pleading requirements. The relevant principles in relation to the requirement for proper pleadings are well established and are (relevantly) summarised by Garling J in Clarke v State of New South Wales (No.4) [2015] NSWSC 1054 at [36] – [39] as follows: "36. The function of pleadings is to state with sufficient clarity the case that must be met by a defendant. In this way, pleadings serve to define the issues for decision and ensure the basic requirements of procedural fairness, namely that a party should have the opportunity to meet a case against him or her: Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286, 296, 302-3. As well, the issues defined in the pleadings provide the basis upon which evidence may be ruled admissible or inadmissible at trial upon the ground of relevance: Dare v Pulham [1982] HCA 70; (1982)148 CLR 658 at 664. 37 Proper pleading is of fundamental importance in assisting courts to achieve the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings: s 56 Civil Procedure Act; McGuirk v The University of NSW [2009] NSWSC 1424 at [24] per Johnson J. 38 As Hodgson JA (with whom Mason P and Handley JA agreed) said in Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135 at 142-143: 'The requirement for a pleading to state material facts which is to be found in the Rules includes the cause or causes of action which are relied upon. Materiality of facts means how those facts are material to a cause of action.' 39. Bongiorno J said in Gunns Ltd v Marr [2005] VSC 251 at 57, in a passage with which, if I may say with respect, I entirely agree: 'Not only must the pleading inform the defendants of the case they must meet now, but it must clearly set out the facts which the plaintiffs must assert to make good their claim with sufficient particularity to enable any eventual trial to be conducted fairly to all parties. Vague allegations on very significant matters may conceal claims which are merely speculative. If this be not the case, the plaintiffs must put their allegations clearly.'" 1. In addition to these general principles the defendant relied upon the decision of McDougall J in LGS v Barbagallo (No 3) in support of its submission that the FASOC does not properly plead a breach of confidence claim. The plaintiffs in that case claimed that the defendant had misused their confidential information, obtained while he was their employee. They claimed an account of profits or, alternatively, damages. Justice McDougall paraphrased, at [89]-[92], the four elements that Gummow J (in dissent as to the outcome but not relevantly for present purposes) identified in Corrs Pavey Whiting and Byrne v Collector of Customs (Vic) (1987) 14 FCR 434; [1987] FCA 266 at 443 as critical to a plaintiff's claim to protect confidential information as follows: "89. First, the plaintiff must identify with specificity, not merely in global terms, what is the information that is said to be confidential. "90. Secondly, the plaintiff must show that the information has the necessary quality of confidentiality. 91. Thirdly, the plaintiff must show that the defendant received the information in circumstances that imposed on it an obligation of confidence. 92. Fourthly, the plaintiff must show actual or threatened misuse of that information." 1. His Honour noted at [93] that the criteria proposed by Gummow J have been accepted as authoritative, for example, by the Full Court of the Federal Court in Optus Networks Pty Ltd v Telstra Corporation Ltd (2010) 265 ALR 281; [2010] FCAFC 21 at [39]. His Honour went on to state at [94]-[97]: "94. The need for specificity in identifying the allegedly confidential information was discussed by Mason J (with whom the other members of the court agreed) in O'Brien v Komesaroff (1982) 150 CLR 310; [1982] HCA 3 at 327-328. As his Honour pointed out at 327, a failure to identify the information with sufficient specificity may mean that the court cannot satisfy itself that the information was imparted to the defendant, or that it was imparted to the defendant, or that it was imparted to the defendant, or that it was imparted in circumstances giving rise to an obligation of confidence, or that it is truly confidential and does not include material which is public or common knowledge. 95. I add, that the failure to identify with sufficient specificity the allegedly confidential information may make it difficult, if not impossible, for the court to conclude that the defendant has misused, or threatens to misuse, that information. … 97. Although in this case In Vivo seeks an account of profits or damages, and not injunctive relief, it cannot be correct that it is thereby relieved of the necessity of identifying with adequate specificity the information said to be confidential, in respect of which it seeks relief." [emphasis added] 1. In Mancini v Mancini [1999] NSWSC 800 Bryson J observed at [7]: "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] 1. I have had regard to Ms Merkel's submission that the authorities relied upon by the defendant requiring specificity in breach of confidence pleadings are distinguishable from the present case because they are concerned with situations in which a party was seeking to restrain a solicitor from acting in proceedings on the basis of an alleged breach of confidence rather than a case concerning a claim for compensation for loss. That submission cannot be accepted having regard to what McDougall J stated in LGS at [97] extracted above at [38]. 2. Applying these principles to the present case, I am satisfied that the FASOC does not disclose a cause of action for the following reasons. 3. First, the FASOC does not adequately describe the documents and/or information alleged to be confidential in other than global terms. Contrary to Ms Merkel's submission I am unable to accept that reading the particulars enumerated at (a) to (h) of paragraph 32 of the FASOC with the general words that precede them in paragraph 32 cures this difficulty. The authorities do not support such a submission. As currently pleaded the confidential material is not described and thus it is not possible to ascertain whether it was in fact confidential. 4. Secondly, the FASOC does not disclose how the information has the necessary quality of confidentiality. The affidavit of the plaintiff filed in the Family Provision proceedings provided his financial circumstances to the Court in any event. Without specificity as to what material is said to be confidential, it cannot be ascertained whether it is now in the public domain and has thus lost its quality of confidence. 5. Thirdly, the FASOC does not identify the circumstances in which the information said to be confidential came into existence. At least some of the more general material described in the particulars in the FASOC could well have been known to the defendant prior to being retained by the plaintiff. The FASOC does not describe how the defendant is alleged to have received the information in circumstances that imposed on it an obligation of confidence. 6. Fourthly, the FASOC does not set out what the actual misuse of the information is said to be. Ms Merkel submitted that inferences could be drawn from a number of circumstances to establish misuse of the material. Those circumstances are: the fact that one of the privileged documents referred to in defendant's list on discovery is described as correspondence from the defendant to Mr Geddes on 4 November 2004; the request for the family law file to be transferred to the Supreme Court for the Family Provision proceedings; a reference in an affidavit sworn by a solicitor of the defendant in the Family Provision proceedings that the family law proceedings may be pertinent to the Family Provision proceedings; and a question asked of the plaintiff in cross examination in those proceedings by the defendant's counsel as to what his settlement was in the family law proceedings. From these events the Court is invited to infer that the defendant breached its duty of confidence to the plaintiff. 7. The material before me shows that the plaintiff was known to be someone who had been divorced and had children. In fact, his three children were among the beneficiaries to the will that the plaintiff challenged in the Family Provision proceedings. Even if it can be assumed that the plaintiff could establish that some of the material in the family court proceedings had the necessary characteristic of confidentiality, it is difficult to see how the allegation of misuse of it by the defendant in the subsequent proceedings could be established. The fact that the plaintiff was a divorced man would have been apparent to any firm acting for the executrix in those circumstances. It seems to be that any prudent solicitor acting for the executrix would have made enquiries about the family law proceedings. 8. In addition to the above deficiencies, I am satisfied that paragraphs (33) and (34) of the FASOC do not disclose causes of action. The duty of confidence prohibits both disclosure and misuse. The Court of Appeal (Beazley P, Macfarlan and Emmett JJA agreeing) considered this in Marshall v Prescott at [50] – [57]. Beazley P stated the relevant principles at [51]: "It is a well-established principle that a person 'who receives information in confidence shall not take unfair advantage of it': Seager v Copydex Ltd [1967] 2 All ER 415 at 417 per Lord Denning MR. The prohibition is on disclosure, because that would destroy the information's confidentiality, as well as on the use of the information. As Lord Denning MR added, at 417, 'use' must not be made of information 'to the prejudice of him who gave it without obtaining his consent'." 1. While the duty of loyalty prevents a solicitor from acting against, or contrary to the interests of, his or her client during the life of the retainer, possession of confidential information with respect to a former client will not necessarily require that a solicitor refrain from acting against that client. Where there is no risk of disclosure, the solicitor is free to act. In other cases, some lesser relief than restraining a solicitor from acting may obviate the risk of disclosure. In other cases, it may be necessary for the court to intervene. There is no duty on the part of a solicitor, where there is a duty of confidence, not to act. 2. The relevant principles applicable to the subsistence of solicitors' duties following the termination of the retainer were stated by the House of Lords in Prince Jefri Bolkiah v KPMG [1999] 2 A.C. 222 ("Prince Jefri") at 235 as follows: "Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary duty which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence." 1. The decision in Prince Jefri has been followed in New South Wales and all other Australian jurisdictions, save for Victoria: Belan v Casey per Young CJ in Eq at [18], cited by Brereton J in Kallinicos v Hunt at [76]. 2. The only contrary authority is the obiter observation of Brooking JA of the Victorian Court of Appeal in Spincode Pty Ltd v Look Software Pty Ltd [2001] VSCA 248. 3. Having reviewed the application of Prince Jefri in Australia and New Zealand Young CJ in Eq stated in Belan v Casey at [21] that: "In my view, the overwhelming weight of authority is to the effect that where the applicant to restrain a solicitor is a former client, the sole consideration is whether there is a real risk of disclosure of confidential information and one does not delve into matters of conflict of interest or conflict of duty. In other situations this delving may well be material." 1. To the extent that paragraphs [34] and [35] of the FASOC suggest some additional duty not to act against a former client, no cause of action is disclosed therein. 2. In addition to the lack of sufficient detail in the FASOC concerning the nature of the breach of confidence claim, a further difficulty with the FASOC is that it does not disclose a summary of the material facts as to the loss suffered by the plaintiff. Paragraph [39] of the FASOC simply alleges that by acting for the executrix in the Family Provision proceedings, the defendant "contributed to the plaintiff's disappointment and distress because he attributed his failure to receive Farm Purchase 1143 in part to the role that Mr Maguire played in the defence". 3. Ms Merkel submitted that it was not necessary for the plaintiff to suffer loss so long as he could establish distress. The difficulty with the pleading is that it does not set out any material facts capable of establishing any loss at all, whether caused by distress or otherwise. Ms Merkel relied upon the fact that the plaintiff is a now a mentally unwell man. I was provided with material to that effect. Although objection was taken to that material being adduced at any final hearing on the basis, inter alia, of late service and prejudice, I do not understand there to be any controversy between the parties in a general sense that the plaintiff's disappointment at not inheriting the family farm has caused him considerable distress. On the material before me on this application, I am prepared to accept that the plaintiff suffers from depression and other mental health issues. Harrison J averted to some of this in his judgment at [50] as an explanation for the delay in the progress of this matter over the last almost five years. That material cannot overcome the deficiency in the FASOC as to identification of the material facts establishing any loss to the plaintiff. 4. For these reasons, I am satisfied that the FASOC does not disclose a cause of action and this second application for leave to amend should be refused. 5. Having determined this second application on the question of adequacy of pleadings it is not necessary for me to also have regard to consideration of relevant case management principles or the question of prejudice to the respective parties. Despite this, given the inevitable result of this second application being refused, I propose to make some further observations regarding those principles in any event. 6. In my earlier decision in Borgese v Cater & Blumer Pty Ltd t/as Cater & Blumer (No 2), I set out the relevant case management principles at [98] to [111]. I have had regard to those principles and am satisfied that there is a further basis for refusing leave to file the FASOC in addition to the identified pleading deficiencies. 7. First, no explanation has been advanced on behalf of the plaintiff as to why this amendment is being sought at this late stage in circumstances where the plaintiff has had the family law documents available on discovery since early 2013. 8. Second, the defendant would suffer further prejudice should leave be granted to file the FASOC. The further enquiries that would be necessary were identified by Mr Faulkner in his submissions and I accept that they are genuine avenues for further investigation. 9. Third, as the decision in Aon Risk Services Australia Ltd v The Australian National University (2009) 239 CLR 175; [2009] HCA 27 makes clear, the prejudice to be considered is not only to the litigants in the present matter but to other litigants as well. 10. Fourth, the delay in this matter has been considerable already as the procedural history of the matters set out in my previous decision and the decision of Harrison J establishes. 11. Finally, the prejudice to the defendant needs to be weighed against the prejudice to the plaintiff. The plaintiff would only be able to establish some relevant prejudice if it was able to show that he had an arguable case as set out in the FASOC. I am not satisfied that a case based on breach of confidence could succeed in any event for the reasons that I have considered above. There is simply insufficient material before me capable of establishing that the material was not in the public domain by virtue of the Family Provision proceedings and that the defendant had misused such information in those proceedings for the reasons I have considered above. Summary dismissal 1. The result of my refusal to grant leave to file the FASOC is that the only remaining cause of action in the ASOC is the equitable cause of action based on a breach of the duty of loyalty. The evidence satisfies me that, as at 2004, any retainer the defendant had ceased. The authorities extracted above at [50] – [53] above establish that any fiduciary relationship between the defendant and the plaintiff ceased at that time. It follows that the defendant's motion must succeed. 2. I accept that as a general rule the power to strike out pleadings because they disclose no reasonable cause of action should only be exercised in plain and obvious cases: General Steel Industries v Commission for Railways (1964) 112 CLR 125; [1964] HCA 69; Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27. In all of the circumstances of this case I am satisfied that this is such a case. ORDERS 1. I make the following orders: 1. The plaintiff's second application for leave to file a further amended statement of claim is refused. 2. The defendant's motion for summary dismissal is allowed. 3. The plaintiff is to pay the defendant's costs of the motions. 4. The plaintiff is to pay the defendant's costs of the proceedings on the ordinary basis. 5. The defendant has leave to approach my Associate within 14 days should it seek variation of Order 4. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 February 2017