Supreme Court New South Wales Medium Neutral Citation: Técnicas Reunidas SA v Andrew [2018] NSWSC 645 Hearing dates: 23 and 24 April 2018 Decision date: 14 May 2018 Jurisdiction: Equity - Commercial Arbitration List Before: Ball J Decision: Proceedings dismissed with costs. Catchwords: EQUITY – Fiduciary duties – Fiduciary relationships – Solicitor and client – Duty of loyalty – Circumstances in which the duty continues following termination of a retainer EQUITY – Fiduciary duties – Fiduciary relationships – Solicitor and client – Duty to protect confidential information – Modification of the duty by contract – Whether there is a real risk of disclosure of confidential information – Quality of evidence necessary to make a finding EQUITY – Fiduciary duties – Jurisdiction of the Court – Whether a fair-minded, reasonably informed member of the public would conclude that a prohibitive injunction is required for the proper administration of justice Legislation Cited: Construction Contracts Act 2004 (WA) Cases Cited: Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550 Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2007] NSWSC 350 Babcock & Brown DIF III Global v Babcock & Brown International Pty Ltd [2015] VSC 453 Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2015] VSC 305 Cleveland Investments Global Ltd v Evans [2010] NSWSC 567 Cooper v Winter [2013] NSWCA 261 Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd (2014) 228 FCR 252; [2014] FCA 1065 Earl of Cholmondeley v Lord Clinton (1815) 19 Ves Jun 261; 34 ER 515 Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 Maxwell-Smith v S & E Hall Pty Ltd (2014) 86 NSWLR 481; [2014] NSWCA 146 Newman v Phillips Fox (1999) 21 WAR 309; [1999] WASC 171 Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 Category: Principal judgment Parties: Técnicas Reunidas S.A. (ABN 50 159 554 686) (Plaintiff) Sadie Andrew (First Defendant) Anthony Arrow (Second Defendant) John Michael Battye (Third Defendant) Robert Charles Buchanan (Fourth Defendant) Gregory Campbell (Fifth Defendant) Bettina Margaret Cole (Sixth Defendant) Matthew Croagh (Seventh Defendant) Simela Karasavidis (Eighth Defendant) Christina Adrienne Parker (Ninth Defendant) Ian David Rennick (Tenth Defendant) Ewan Robertson (Eleventh Defendant) Leslie William Ryan (Twelfth Defendant) Representation: Counsel: R Dick SC with D Barnett (Plaintiff) IM Jackman SC with MR Tyson (Defendants) Solicitors: Quinn Emanuel Urquhart & Sullivan (Plaintiff) Clyde & Co (Defendants) File Number(s): 2018/35996 Publication restriction: None Judgment Introduction 1. The issue in this case is whether the defendants, who are the partners of the legal firm Pinsent Masons (PM), should be restrained from acting for Downer EDI Engineering Power Pty Ltd (Downer) in an ICC arbitration between Downer and the plaintiff, Técnicas Reunidas SA (TR), because PM previously gave advice to TR in connection with the subject matter of that arbitration. Factual background 1. The arbitration concerns a subcontract dated 4 March 2014 by which TR engaged Downer to perform certain structural, mechanical, electrical and instrumentation works in connection with a technical ammonium nitrate plant TR had contracted to build for Burrup Nitrates Pty Ltd in Burrup, Western Australia. 2. In early 2015, disputes arose between TR and Downer concerning Downer's performance under the subcontract and its right to receive progress payments. In connection with those disputes, Downer made two adjudication applications under the Construction Contracts Act 2004 (WA), the first of which was served on 16 June 2015. 3. At that time, Downer was represented by Norton Rose Fulbright Australia (NRFA). The partners at NRFA responsible for the relevant work were Mr Matthew Croagh and Mr William Ryan, who are based in Melbourne. They have been assisted principally by Ms Gemma Thomas, Ms Eliza Danby, Mr James Scannell, Mr Hugo Shaw and Mr Andrew McNeill. 4. TR retained Lavan Legal, a Western Australian firm, in relation to the adjudication applications. However, on 23 June 2015, Ms Alma Gomez, the deputy director of the legal department of TR, sent an email to Mr Jonathan French, a partner of Pinsent Masons LLC, which is a limited liability partnership operating under the laws of the United Kingdom with which PM is affiliated, asking if he could recommend local lawyers. It will be convenient in this judgment to refer to "PM" as including Pinsent Masons LLC, unless specifically stated otherwise. 5. Mr French replied to Ms Gomez's email that PM had recently opened offices in Sydney and Melbourne and would be in a position to help. Following that introduction, on 7 August 2015, PM sent TR a retainer letter enclosing a costs disclosure statement, a proposed costs agreement and standard terms of business. 6. The costs disclosure agreement described the scope of the work to be performed by PM in these terms: You have asked us to provide strategic advice on issues that arise from time to time on the Tan [technical ammonium nitrate] Burrup Project, including in relation to your subcontract with Downer EDI Engineering Power Pty Ltd. 1. Clause 9 of the standard terms dealt with confidentiality and disclosure. It relevantly provided: We may in the past have advised, or may now or in the future advise, other clients whose interests differ from yours. In advising such other clients we may come into possession of confidential information which would be material to your matter. In addition, confidential information we hold about you may be material to such other clients' matters. You agree that our duty of confidentiality to you will be satisfied by putting appropriate safeguards (such as an effective information barrier) in place, in accordance with applicable rules, to ensure that access to your relevant confidential information within Pinsent Masons is restricted. Where such measures are in place, you agree that you will not seek to prevent us from acting for other clients by reason of our holding your confidential information. 1. Clause 10 dealt with conflicts. It relevantly provided: We have procedures designed to prevent us from acting for one client in a matter where there is or could be a conflict with the interests of another client for whom we are acting. If you are aware or become aware of a possible conflict of this type, please raise it with us immediately. If a conflict of this nature arises, then we may be able to continue to act for both you and the other client (subject to our compliance with paragraph 9 (Confidentiality and disclosure), provided each of you gives informed consent to us so acting. If such consent is not given by both parties then it will be up to us, taking account of legal constraints, professional rules and your and the other client's interests and wishes, to decide whether we should continue to act for you only, or for the other client only, or for neither. 1. Clause 19 dealt with termination. It relevantly provided: You can ask us to stop work on any of your matters at any time by writing to us. We can also cease work on any of your matters by giving seven days written notice (or shorter period if this is reasonable in the circumstances) where: • there is a conflict with our professional obligations; • we are required by law to cease working for you; • you fail to pay any invoiced costs; • you fail to provide us with trust money when requested; • you indicate you have lost confidence in us; • you fail to accept an offer of settlement which we think is reasonable; • we consider we have a conflict of interest in continuing to act for you; • we consider we are not receiving prompt and proper instructions; • there is just cause. You may also end this agreement at any time by giving us notice in writing. 1. The agreement stated that the partners who would work on the matter were Mr Andrew Denton and Mr Michael Battye. The assistants on the matter were Mr Adam Perl and Ms Louisa Donnelly. All of them were based in Sydney, although Mr Battye at the time lived in Adelaide and Mr Denton has since moved to London. 2. On 2 September 2015, Downer made a second adjudication application and, on 16 September 2015, it served a notice terminating the subcontract on the ground that TR had committed a substantial breach of it by deducting the amount of $2,100,000 from the amount payable to Downer in satisfaction of Downer's alleged obligation to increase the amount of the bank guarantees and performance bonds it was required to provide under cl 14 of the general terms and conditions that formed part of the subcontract (the General Terms), and by failing to remedy that breach within the period specified in a notice of demand served in accordance with cl 29.3A of the General Terms. Following service of the notice of termination, Downer ceased work and demobilised its personnel, plant and equipment. 3. On 2 October 2015, TR served a notice alleging that Downer's conduct was a wrongful repudiation of the subcontract and terminating the subcontract for that wrongful repudiation. NRFA responded to that notice on Downer's behalf on 23 October 2015. 4. During the period from June 2015 to October 2015, PM provided advice on the adjudication applications, whether Downer was obliged to top up the guarantees that it had given by the $2,100,000, whether TR was entitled to deduct that amount from the amount payable to Downer and what steps TR should take in response to the notice of termination served by Downer. It is not entirely clear from the evidence how much PM charged TR for that advice, but it was in excess of $70,000. 5. It appears that nothing of significance happened for a period of time following NRFA's letter dated 23 October 2015 and PM gave TR no further advice in relation to the dispute. Then, on 4 March 2016, NRFA on behalf of Downer served a request for arbitration under the ICC Arbitration Rules in accordance with cl 31 of the General Terms. On 26 March 2016, TR retained White & Case to act for it in the arbitration. 6. On 25 May 2016, Mr French sent an email to Ms Gomez saying that his colleagues in Australia had heard rumours "that Downer are close to finalising a substantial claim against "a Spanish Contractor" and would shortly be serving, or have just served, a Request for Arbitration". 7. Ms Gomez replied on 31 May 2016 saying: Downer has indeed filed for arbitration (2 months ago). TR's management decided to engage Anne Veronique Schlaepfer (W&C) to assist TR in the arbitration. Anne Veronique has participated in a number of arbitrations against TR. In the same email, Ms Gomez asked Mr French for his views on the legal consequences of a particular definition in a Deed of Agreement signed by Downer and TR on 30 April 2016 "to settle previous claims". Mr French provided that advice by email on 1 June 2016. 1. On 31 August 2016, Mr French sent an email to Ms Gomez. Relevantly, the email said: We appreciate that you have appointed White & Case to represent you in the arbitration, but I thought it worth emphasising that we remain very enthusiastic to assist you here if there is any possibility. We also think that we are very well placed to do so. We have a strong arbitration team based in Australia (as you know) which is rapidly growing. Our team also has a long experience of acting for contractors in arbitrations in Australia and it has an existing knowledge of the issues in dispute. We would welcome the chance to discuss how we could assist you, either independently or in some kind of co-counsel role with White [&] Case whereby, for example, we provide the in-country support. If you think there might be any value in discussing directly with us, please let me know and I will suggest some times in the next couple of weeks for a conference call. Ms Gomez did not reply to that email. 1. Between 2012 and 2014, Mr Croagh had had preliminary discussions with PM about moving to that firm. Those discussions stalled but, in or about November 2016, they recommenced and continued up until the end of June 2017. The discussions came to fruition and, following media speculation, PM issued a press release on 8 August 2017 announcing that PM would be appointing four infrastructure and energy lawyers in Australia who would be joining the firm from NRFA. Those lawyers included Mr Croagh and Mr Ryan. Mr Croagh says that, during the discussions, he became aware of a possible conflict arising from the fact that he was acting for Downer in the arbitration and PM had previously provided advice to TR. 2. Mr Croagh and Mr Ryan gave notice of their resignation from NRFA in September 2017. Mr Ryan commenced as a partner of PM on 6 December 2017. Mr Croagh commenced on 15 January 2018. They were joined by Ms Thomas, Ms Danby, Mr Shaw and Mr McNeill, who all commenced employment with PM on 4 December 2017. Following consideration of the conflicts position by PM, Downer chose to follow them as a client and, on 14 December 2017, PM provided Downer with an engagement letter. Under the terms of that letter, Downer is not entitled to the benefit of any information obtained by PM as a result of its prior engagement by TR. 3. Preparation of the arbitration is well advanced. Each party has delivered lengthy pleadings. Downer has disclosed 71,200 documents and TR has disclosed 201,000 documents. Downer has delivered over 2,500 pages of evidence from 10 witnesses and TR has delivered some 50 pages of evidence from 4 witnesses. Each party has retained experts and the programming experts have conferred and produced an initial joint report. The Tribunal has listed the case for a final hearing on dates in February and March 2019. 4. Conscious of the potential conflict, PM took steps to put in place information barriers designed to protect the confidential information of TR before the arrival of the partners and staff working on the arbitration for Downer. Those arrangements were overseen by Ms Antoinette Jucker, who is PM's Compliance Officer for Legal Practice based in London. The arrangements were put in place in accordance with established procedures set out in a manual prepared by PM called "Information Barriers, Protocols and Insider Lists – Procedural Guide". Ms Jucker says that on 3 October 2017 she requested "an IT Lockdown of the Tecnicas Matter [electronic] workspace … that holds the matter related documents and emails" so that access to that workspace was restricted to Messrs Denton, French and Battye. That lockdown was implemented on 4 October 2017. Ms Jucker gives evidence of some modifications to that access in November and December 2017 to permit Ms Donnelly and Mr Perl to have access to enable them to file additional documents and emails and to permit an employee to print a hard copy of the file for Ms Julie Herriott, the Head of Risk & Compliance Operations with PM, who is also based in London. On 22 November 2017, Ms Herriott also requested that all hard copy documents relating to the TR matter be sent to her and, following receipt of those, the hard copy documents have been archived in London with access limited to Ms Herriott or stored in a locked cabinet in PM's London office to which only Ms Herriott has a key. On 8 January 2018, access to the Tecnicas Matter workspace was further restricted to Ms Jucker and Ms Herriott only. 5. On 23 November 2017, PM prepared an information protocol in relation to the arbitration. The protocol gives a brief history of PM's involvement with TR and Downer and identifies the persons at PM who continue to work on the arbitration for Downer (referred to in the protocol as the "Downer Team") and the persons who gave advice to TR (referred to as the "Historic Tecnicas Team"). The protocol states that no work on the Downer matter may be conducted in or from the Sydney office of PM. It also relevantly states: 2 No member of the Historic Tecnicas Team may discuss the Historic Tecnicas Matter with anyone other than a fellow member of the Historic Tecnicas Team. 3 While this Protocol does not prevent members of the Historic Tecnicas Team engaging as necessary with members of the Downer Team on matters pertaining to the practice and clients/potential clients of Pinsent Masons Australia, they must ensure that they do not converse or correspond with any member of the Downer Team on either the conduct of the Arbitration by the Downer Team or the Historic Tecnicas Matter. 1. Each partner and employee of PM who works for Downer on the arbitration or who gave advice to TR has been provided with a copy of the protocol. Each has also signed a personal undertaking. The undertaking signed by the members of the Historic Tecnicas Team states: (a) I will keep to myself and not disclose to any person any Tecnicas Confidential Information (save as required by law); and (b) for so long as Pinsent Masons Australia is acting in the Arbitration, I will not discuss or knowingly permit to be discussed in my presence the Historic Tecnicas Matter or the Tecnicas Confidential Information including, without limitation, discussion on the same with any member of the Downer Team. 1. "Tecnicas Confidential Information" is defined to mean "all confidential and/or privileged information belonging to Tecnicas and relating to the affairs of Tecnicas which has become available to Pinsent Masons Australia and Pinsent Masons LLP and certain of its personnel in the conduct of the Historic Tecnicas Matter". Similar undertakings have been given by members of the Downer team. The undertakings are given to PM, although during the course of the hearing they were offered to the Court if the Court considered that that was an appropriate condition of refusing the relief sought by TR. 2. Both Mr Croagh and Mr Ryan give evidence of meeting Mr Battye and Mr Denton at social events, such as PM's Christmas party, and functions for partners, such as a Partners Integration meeting and Regional Partners conference. Both deny having any discussions at those meetings about the arbitration or the advice given to TR by PM, other than the fact that they were working on the Downer arbitration and Mr Battye and Mr Denton had previously given advice to TR. Neither Mr Croagh nor Mr Ryan was cross-examined. 3. Ms Thomas also swore an affidavit in which she deposed to having met various persons who were involved in the work that PM did for TR. Since 19 March 2018, she has been working on another matter on which Ms Donnelly is also working. For a time, she also filled in for Mr Perl on another matter for which Mr Battye was the responsible partner while Mr Perl was on leave. Ms Thomas denies having had any discussions with any of those persons about the arbitration or the advice given to TR by PM, other than the fact they had worked for TR or were working on the arbitration for Downer, as the case may be. Ms Thomas also was not cross-examined. 4. On 27 November 2017, Ms Jucker sent an email to Ms Gomez advising her that a number of lawyers would be joining PM from NRFA and that when they did, they would continue to represent Downer in the arbitration. Ms Jucker sent a further email to Ms Gomez on 4 December 2017 letting her know that the NRFA lawyers acting for Downer on the arbitration were starting in the Melbourne office that day and that in the course of the following day, PM would be formally notifying the Tribunal and TR that PM would be acting for Downer in place of NRFA in the arbitration. In fact, Mr Ryan, in his capacity as a partner of NRFA, had notified the Tribunal and White & Case on 30 November 2017 of the change. 5. TR objected to PM acting for Downer. Following correspondence between the parties, and the parties and the Tribunal, on the issue, White & Case sent an email to the Tribunal on 11 January 2018 reaffirming TR's position that it was not asking the Tribunal to decide the conflicts issue but that "[f]or the only purpose of informing the Arbitral Tribunal about the seriousness of the issue", they were enclosing an affidavit from TR's general counsel, Mr Emilio Acevedo, correspondence between TR and Ms Jucker, and a letter dated 10 January 2018 from Quinn Emanuel Urquhart & Sullivan UK LLP (Quinn Emanuel), who had been engaged by TR to advise it in relation to the conflicts issue, to PM. Mr Acevedo's affidavit described in some detail the nature of the advice that PM had given TR, as did the letter from Quinn Emanuel. The letter also sought additional information on the steps that PM had taken and intended to take to protect TR's confidential information. Lastly, it sought confirmation that PM would cease acting for Downer, failing which it threatened court proceedings. 6. PM replied to Quinn Emanuel's letter on 12 January 2018 asking for more time in which to provide some of the information sought. It also raised the question which court would have jurisdiction to determine any application that TR might bring. In that connection, it enclosed a copy of the retainer letter PM had sent TR and drew Quinn Emanuel's attention to the fact that para 23 of the standard terms of business (which, as I have said, formed part of the retainer letter) provided for submission of any dispute relating to the retainer exclusively to the courts of New South Wales, and section 8 of the costs agreement, which, somewhat inconsistently, provided for non-exclusive submission to the courts of Victoria. A copy of that letter (with enclosures) was sent to Mr Ryan, who forwarded a copy to the Tribunal on 15 January 2018. In addition, on 17 January 2018, in anticipation of a procedural hearing of the Tribunal in Singapore on 20 January 2018, Mr Ryan sent the Tribunal a number of documents relating to the conflicts issue including submissions and an affidavit of Ms Jucker sworn on 17 January 2018. That affidavit exhibited, among other things, a copy of PM's letter dated 12 January 2018, which included a copy of the retainer letter. 7. On 19 January 2018, Quinn Emanuel wrote to PM alleging that the disclosure to Mr Ryan and the Tribunal of PM's engagement letter dated 7 August 2015 with TR was a breach of PM's duty of confidence to TR. The letter sought an explanation for that breach and demanded that PM procure "its immediate withdrawal and deletion and an undertaking from each Unlawful Recipient that they will not further rely on or disclose this material". 8. Mr Ryan responded the following day by email, which was copied to members of the Tribunal. He attached a copy of Quinn Emanuel's letter to which he was responding and maintained that PM's engagement letter was in a standard form and not confidential, and that in any event any confidentiality had been waived by TR. However, he asked one arbitrator who had already received the document to delete it and indicated that copies of it would be removed from bundles that had been delivered to the chambers of the other arbitrators. PM arranged to delete other copies from the bundles that had been prepared for the purposes of the procedural hearing. 9. Prompted by questions from Quinn Emanuel, Ms Jucker and Ms Herriott, or those working for them, have taken a number of other steps to determine who from PM might have had access to TR's confidential information. Those enquiries revealed that prior to 5 December 2017, 19 people (including members of the Historic Tecnicas Team) had accessed the Tecnicas Matter workspace. Ms Jucker explains in her affidavit who each of those persons is. They include administrative assistants and a number of other people, some of whom have left the firm. In a number of cases, the persons who had had access to the workspace have no recollection of doing so. In one case, a solicitor obtained access to retrieve documents that had been incorrectly filed. Each person who had access and who remains with the firm has signed a personal undertaking. In addition, Ms Jucker and Ms Herriott themselves have signed personal undertakings, as have other employees of PM who have been involved in dealing with the issue, with the result that, according to Ms Jucker, every person employed by PM who has had access to the Tecnicas Confidential Information has signed a personal undertaking. 10. TR commenced these proceedings on 2 February 2018. 11. On or around 13 March 2018, Ms Thomas discovered that an electronic copy of the exhibit to Ms Jucker's affidavit sworn on 17 January 2018, which was filed in the Downer arbitration workspace, still contained a copy of PM's engagement letter as part of the exhibit. Ms Thomas notified Ms Herriott of her discovery, who arranged for the letter to be deleted, and also told Clyde & Co, who were acting for PM in these proceedings, what had happened. Clyde & Co passed that information on to Mr Duncan Watson of Quinn Emanuel, who acts for TR in these proceedings. 12. Mr Ryan also says that in connection with these proceedings, Clyde & Co provided him with a heavily redacted version of an affidavit that Mr Acevedo had sworn for the purposes of these proceedings and subsequently a link to a redacted version of the exhibit to that affidavit, which he downloaded to his laptop. It became apparent that the exhibit contained at least some of the correspondence between PM and TR between June 2015 and October 2015. Mr Ryan says that he immediately stopped reading, notified Clyde & Co of what had happened, deleted the exhibit from his laptop and advised Mr Croagh not to look at the exhibit. TR's claim 1. TR puts its case in three ways. First, it claims that PM has breached its fiduciary duty of loyalty to TR and should be restrained from acting for Downer for that reason. Second, it claims that there is a real risk that PM will breach its duty of confidence to TR and that it should be restrained for that reason. Lastly, it contends that the Court should, in the exercise of its inherent jurisdiction to protect the integrity of the judicial process and the due administration of justice, restrain PM from acting. The duty of loyalty 1. A firm of solicitors owes a duty of loyalty to an existing client which, absent fully informed consent, prevents the firm from acting in a way which is contrary to the interests of that client. As Lord Millett (with whom the other members of the House of Lords agreed) explained in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 at 234-5: [A] fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position. A man cannot without the consent of both clients act for one client while his partner is acting for another in the opposite interest. His disqualification has nothing to do with the confidentiality of client information. It is based on the inescapable conflict of interest which is inherent in the situation. See also Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 at [76] per Brereton J, which was cited with approval in Cooper v Winter [2013] NSWCA 261 at [96] per Ward JA (with whom McColl and Barrett JJA agreed) and Maxwell-Smith v S & E Hall Pty Ltd (2014) 86 NSWLR 481; [2014] NSWCA 146 at [24] per Barrett JA (with whom Beazley P and McColl JA agreed). 1. There is some debate about whether, in certain circumstances, the duty of loyalty continues following termination of the retainer. The issue was discussed in detail by Beach J in Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd (2014) 228 FCR 252; [2014] FCA 1065, who preferred what his Honour described as the narrow view of the ratio of Earl of Cholmondeley v Lord Clinton (1815) 19 Ves Jun 261; 34 ER 515 at 520, namely, "that a solicitor acting for Party A in a matter, who ceases to act for Party A and then acts for Party B in the same matter, where such a retainer has been terminated by the act of the solicitor, will be enjoined" (at [45]). However, other statements of the principle, including the one made by Brereton J in Kallinicos, suggest that there is no room for the continuing operation of the duty of loyalty after termination of the retainer; and no exception is suggested in the case where the retainer is terminated by the solicitor: at [76]; see also Cleveland Investments Global Ltd v Evans [2010] NSWSC 567 at [3] per Ward J. 2. It is not necessary for me to add to the already substantial body of material that has been written on the subject. It is sufficient to state that I accept that there may be cases where a solicitor should be restrained from acting for one client having terminated a retainer with another on the basis of a breach of the duty of loyalty. However, it seems to me that those cases are most likely to arise where the solicitor terminates the retainer in order to permit the solicitor to act for another client in circumstances where it is disloyal to do so. The breach of the duty of loyalty would be in terminating the retainer and the injunction would be granted to restrain the solicitor from obtaining the benefit of that breach. 3. Whatever the precise scope of the principle, in my opinion, it does not apply in this case because the retainer between TR and PM was terminated well before PM commenced acting for Downer; and it was not terminated by PM. 4. TR submits that the retainer could only be terminated in accordance with cl 19 of the standard terms that formed part of the retainer and that that clause only permitted termination in writing by TR at any time or termination in writing by PM on seven days' notice (or a lesser period where necessary) for the reasons set out in the clause. TR submitted that neither party gave written notice of termination of the retainer until PM gave notice that it intended to act for Downer in the arbitration. 5. I do not accept that submission. In my opinion, the retainer came to an end in September 2016. Although the written retainer was expressed in very broad terms by reference to the provision of strategic advice in relation to the "Tan Burrup Project", it is plain from what happened that the retainer was limited to providing strategic advice in relation to TR's disputes with Downer in relation to that project. That advice was given during the period from June to September 2015. The disputes between TR and Downer became the subject of the arbitration and TR chose to retain White & Case to act for it in that arbitration. In his email dated 31 August 2016, Mr French proposed to Ms Gomez that, if there was any value in discussing how PM might continue to assist TR, they could arrange a conference call to do so. Ms Gomez did not reply to that email. The only inference that can be drawn from that fact is that TR regarded the work that PM had undertaken for it under the retainer as being complete and that consequently there was no need for further discussion. That conclusion is reinforced by the fact that there was no further contact between TR and PM until Ms Jucker's email dated 27 November 2017. It is apparent that any need TR had for strategic advice from PM in relation to the project was overtaken by the commencement of the arbitration by Downer and TR's decision to retain White & Case. The fact that Ms Gomez asked Mr French a discrete question in response to his email dated 25 May 2016 does not undermine that point. The likelihood is that Ms Gomez asked the question out of politeness, given that it was clear from her response that TR had chosen to use White & Case in connection with the arbitration. It is not evidence that TR intended from time to time in the future to seek strategic advice from PM in relation to the dispute. Protection of confidential information 1. A firm of solicitors owes a duty to a former client to preserve the confidentiality of information provided to the firm by the client during the subsistence of the retainer. The firm may be restrained from engaging in conduct where that conduct gives rise to a real risk that the duty to preserve confidentiality may be breached, either intentionally or inadvertently, to the client's detriment. One type of case in which that risk might arise is where the firm accepts instructions to act for another client with an adverse interest in a matter to which the information is or may be relevant: Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 at 235-7; Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550 at [32], [34] per Bergin J. In those cases, the firm bears an evidential burden of establishing that there is no real risk that the confidential information will be disclosed to those acting for the adverse party. As Lord Millett explained in Prince Jefri at 237: Once the former client has established that the defendant firm is in possession of information which was imparted in confidence and that the firm is proposing to act for another party with an interest adverse to his in a matter to which the information is or may be relevant, the evidential burden shifts to the defendant firm to show that even so there is no risk that the information will come into the possession of those now acting for the other party. There is no rule of law that Chinese walls or other arrangements of a similar kind are insufficient to eliminate the risk. But the starting point must be that, unless special measures are taken, information moves within a firm. See also Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550 at [34] per Bergin J; Babcock & Brown DIF III Global v Babcock & Brown International Pty Ltd [2015] VSC 453 at [65] per Riordan J; Newman v Phillips Fox (1999) 21 WAR 309; [1999] WASC 171 at [61] per Steytler J. 1. PM submitted that, in the present case, these principles were modified by the terms of the retainer between it and TR and, in particular, cl 9 of the standard terms, which it is said makes it clear that TR may continue to act "by putting appropriate safeguards (such as an effective information barrier) in place, in accordance with applicable rules, to ensure that access to your relevant confidential information within Pinsent Masons is restricted". However, in my opinion, that clause does not modify the duty of confidentiality. It simply recognises that the duty of confidentiality will not be breached if appropriate information barriers have been put in place. 2. It is not disputed in this case that, while acting for TR, PM obtained and indeed itself created confidential information in the form of legal advice that is directly relevant to the subject matter of the arbitration. The question in those circumstances is whether, if PM is permitted to continue to act for Downer, there is a real risk that some part of that confidential information will be disclosed to those working for Downer. It is not suggested that that might be done deliberately. The question is whether there is a real risk that PM might do so inadvertently. I have concluded that there is not. 3. Broadly speaking, inadvertent disclosure could occur in one of two main ways. The first is if a member of the Downer team inadvertently obtains access to or is provided with a copy of a document that records some part of the confidential information. The second is if a person who has knowledge of the confidential information inadvertently reveals part of it. 4. In my opinion, there is no real prospect that there will be inadvertent disclosure of a document containing confidential information. In accordance with the procedures put in place before PM starting doing work for Downer, all hard copy documents were sent to London and placed in secure storage there. In addition, access to electronic documents has been restricted since 4 October 2017. There is no suggestion that those restrictions are ineffective to prevent unauthorised access to the documents. 5. TR points to the fact that PM disclosed a copy of its engagement letter to people working on the Downer matter and to the Tribunal as evidence of the risk of inadvertent disclosure. However, in my opinion, the engagement letter was not relevantly confidential and the disclosure was not inadvertent. The only part of the letter that could be regarded as confidential is the paragraph setting out the scope of PM's retainer. The rest of the letter and attachments set out who was to perform the work, their charge out rates and PM's standard terms of engagement. None of that information could be regarded as confidential to TR. More information about the scope of the work PM did for TR was given in Mr Acevedo's affidavit and the letter from Quinn Emanuel dated 10 January 2018 than in the retainer letter. By providing that material to the Tribunal and Downer, TR waived any rights of confidentiality it had in the information. The fact that TR maintained that the information was confidential and insisted that its retainer letter be retrieved and that PM complied with that request does not alter the position. Understandably, PM was keen to accommodate TR to the extent that it could. But that does not establish that the assertions TR made about the letter were correct. 6. Nor do I accept that there is a real risk of inadvertent disclosure of confidential information by a person who possesses that information. Although the evidence is that 19 people in all have at some stage accessed the TR workspace, it seems clear that the only people who are likely to have a recollection of the confidential information are the people who worked on the TR matter and Ms Jucker and Ms Herriott. 7. The people who work on the arbitration for Downer are based in Melbourne. The people who are in possession of the TR confidential information are based in either London or Sydney. Consequently, casual contact between the two groups is likely to be rare. It is also relevant that the confidential information, with one exception, is now approximately two and a half years old; and was more than two years old when PM first started doing work for Downer. The exception relates to the single email that Mr French sent Ms Gomez on 1 June 2016, which dealt with an incidental issue. The significance of this point is that the relevant information, to the extent that it is remembered, is not likely to be uppermost on the minds of those who retain it. 8. There is some contact between members of the Downer team and those who did work for TR. However, each of the members of both teams was given a copy of the information protocol dated 23 November 2017 before PM commenced work for Downer and each has signed a personal undertaking. There is no reason to think that those undertakings will not be complied with. It is apparent that PM takes its confidentiality obligations seriously. There have been two potential breaches of TR's confidential information. One relates to the retainer letter. The other relates to the affidavit sworn by Mr Acevedo for the purpose of this proceeding. I have already explained why I do not think that the retainer letter was confidential. Nonetheless, Ms Thomas, as soon as she discovered a copy of the retainer letter in the Downer workspace, took steps to have it removed. The annexures to Mr Acevedo's affidavit plainly contained confidential information belonging to TR. However, that information was not disclosed by PM. As soon as Mr Ryan became aware of the nature of the annexures, he informed Clyde & Co and took steps to protect TR's confidentiality in the documents. There is no evidence that he actually obtained confidential information as a result of the error. The two examples are not examples of inadvertent breaches of the duty of confidence by PM and they are evidence that PM, and Ms Thomas and Mr Ryan in particular, are alert to the need to protect TR's confidential information and the need to comply with their personal undertakings. It is not without significance that the two examples arose in the context of TR's agitation of the issue and not in the normal course of PM acting for Downer in the arbitration. 9. TR submits that the Court cannot be confident that there is no real risk of inadvertent disclosure because the solicitors who provided advice to TR have not sworn affidavits, there was some contact between Mr Ryan and Mr Croagh and PM before they signed personal undertakings and not all personal undertakings were signed before PM commenced working for Downer – such as the undertakings signed by Ms Jucker and Ms Herriot. However, I accept the evidence of Mr Ryan and Mr Croagh to the effect that as soon as it was identified that PM had done work for TR in relation to the dispute with Downer, the subject was not discussed further and that consequently no confidential information was disclosed to them. I do not think that it was necessary for everyone who was involved in providing advice to TR or is involved in acting for Downer to swear an affidavit. It is not apparent what each of them could have said, other than that they have abided by their personal undertakings. I do not think that it was necessary for them to give evidence to that effect. The information protocol dated 23 November 2017 was put into place by Ms Jucker and Ms Herriott. In those circumstances, I do not think that any significance can be attached to the fact that they themselves did not sign personal undertakings until after PM commenced work for Downer. Similarly, the fact that others who may have been exposed to the confidential information but were not involved in advising TR did not sign personal undertakings until later is not significant, when it is unlikely that they retained any confidential information and there is no suggestion that they had any contact with any member of the Downer team. The court's inherent jurisdiction 1. The principles relating to the Court's inherent jurisdiction to prevent a solicitor acting for a party were stated in these terms by Brereton J in Kallinicos v Hunt (2005) 64 NSWLR 561; [2005] NSWSC 1181 at [76]: • [T]he court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice … • The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice … • The jurisdiction is to be regarded as exceptional and is to be exercised with caution … • 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 … • The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief … See also Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2007] NSWSC 350 at [42] per Bergin J; Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2015] VSC 305 at [3] per Bell J. 1. I am not satisfied that a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that PM be prevented from continuing to act for Downer. In many cases, such a conclusion might be reached where a firm of solicitors has, in effect, changed sides, as in this case. However, here there has been no breach of the duty of loyalty and no breach of the duty of confidence. PM has put in place procedures to protect the confidential information of TR. It was TR that chose to use another firm to act for it in relation to the arbitration; and PM came to act for Downer because the solicitors advising Downer changed firms midway through the arbitration, well after PM had ceased to act for TR. Those solicitors had already done a large amount of work for Downer and it is apparent that it would have caused Downer considerable costs and inconvenience if it had not decided to continue to use the same solicitors following the move or if it were prevented from doing so now. In my opinion, a fair-minded member of the public aware of those facts would not conclude that it was necessary for the proper administration of justice to prevent PM from acting for Downer. Orders 1. It follows that the proceedings must be dismissed with costs. ********** 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: 14 May 2018