LLB197 Lecture Notes - Lecture 8: Nsw Law Reports, Undue Influence, Chinese Wall
Week 8 – Duty of Loyalty: Conflict of Interest
Conflict of Interest – Acting Against a Former Client
• Cannot use information from the client to disadvantage them
• Prohibited to act against a former client – r 10 Uniform Conduct Rules (Solicitors)
• Lightman J in Re a Firm of Solicitors:
fo the pupose of the la iposig estaits o soliitos atig agaist the
interests of former clients, the law is concerned with the protection of information
which (a) was originally communicated in confidence, (b) at the date of the later
proposed retainer is still confidential and may reasonably be considered
remembered or capable, on the memory being triggered, of being recalled; (c)
eleat to the sujet atte of the suseuet poposed etaie
• Wise for the practitioner not to accept instructions to act for the new client if the
possibility of detriment to the former client is a possibility
• Test of eal ad sesile: possiilit of oflit ouig etee the iteests of
both clients to maintain confidentiality
• Information from the former client remains confidential and may reasonably be
considered remembered or capable, on the memory being triggered, of being
recalled; and
• Prince Jefri Bolkiah v KPMG (a firm) (Prince Jefri) → where a retainer has been
terminated in respect of a client, the only real barrier to accepting instructions to act
against that former client is confidentiality → whether one is in possession of
confidential information of the former client that is relevant to the new matter
• A soliito is liale to e estaied fo atig fo a e liet agaist a foe
client if a reasonable observer, aware of all the relevant facts, would think that
there is a real, as opposed to a theoretical possibility that confidential information
given to the solicitor by the former client might be used by the solicitor to advance
the iteests of a e liet to the detiet of the old liet:
- Carindale Country Club Estate Pty Ltd v Astill (1993) 115 ALR 112 at 118 per
Drummond J
• Newman v Phillips Fox → West Australian Supreme Court identified three bases for
restraining a solicitor from acting for a former client:
1. Breach of duty of confidence
2. Breach of duty of loyalty
3. The courts inherent jurisdiction over the conduct of solicitors as officers of the
court
• The ifoatio that ight e see as ateial to uet liet ad detietal
to former can extend to information on:
- Business practices, and not just information concerning legal issues: Ausmedic
Australia Pty Ltd v Whitely Medical Supplies Pt Ltd [2012] NSWSC 1270;
- Personalities and reactions of participants: Spincode Pty v Look Software Pty
(2001) 4 VR 501 at [58]);
- Litigious strengths and vulnerabilities of former client : In the matter of Edgecliff
Car Rentals Pty Ltd (Deregistered) [2017] NSWSC 244
find more resources at oneclass.com
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Acting Against a Former Client in Family Law Proceedings
• E.g. when a solicitor has worked for husband and wife for a number of years and on
separation one seeks that solicitor → the other party can seek to have this stopped
• Family Court has taken a strict approach
• McMillan and McMillan:
- Restrained the solicitor from acting for the wife because a non-legal law clerk
had been employed by the solicitors acting for the husband left that firm and
et to ok fo the ifes soliitos → may have access to confidential
information
• Have to make a prima facie case that confidential information had been passed by
the client
• Not required to prove that information was accessed
Conflict of Interest – Acting for More than One Party in the Same Matter
• A lae aot gie his elusie, udiided attetio to the iteests of his liet
if he is to etee...his liets iteests ad those of aothe liet to ho he
owes the self-same dut of loalt, dediatio ad good faith. - Davey v Woolley
Hames, Dale & Dingwall (1982) 133 DLR (3d) 647 (Canadian case)
• May act for two competing parties but impose strict requirements
• Cannot act concurrently for parties whose interests are opposed
• Traditional rule → cease acting for all parties
• Modified rule → r 11.5 Australian Solicitors Conduct Rules (textbook pg 321): may
continue to act for one party provided the duty of confidentiality is not put at risk
and the parties have informed consent
• Law Council promotes traditional rule
• Parties are required by statute to receive independent legal advice and written
confirmation that independent legal advice has been given → recognition of the
potetial fo poles he a lae ties to e a seat of to astes
Uniform Conduct Rules (Solicitors)
• r 11
• Adverse interests → informed consent + satisfy duties
• Information barriers might be required – r 11.4.2
• Where actual conflict - could act for one with informed consent – but may have to
cease both – r 11.5
find more resources at oneclass.com
find more resources at oneclass.com
Acting for More than One Party – Chiese Walls or Iforatio Barriers
• Artificial walls of confidentiality between lawyers in the same firm acting for clients
with conflicting interests
• Traditional view → not to support the notion that an information barrier can be
raised between partners of the same firm, preventing them from having knowledge
or access to confidential information about another client of the firm, who may have
an opposing interest to their own client
• When acting for two clients in the same matter the Uniform Conduct Rules
(Solicitors) r 11.4 provide:
- Avoid conflict between duties owed to the clients
- Not act where there is conflict or potential conflict of duties unless:
▪ Each client is aware the solicitor is acting for the other and has given their
informed consent to the arrangement
▪ Where conflict arises in relation to confidential information, an effective
information barrier has been established
• See Freuhauf Finance Corp Pty Ltd v Feez Ruthning (textbook pg 323) → two
departments of a firm taking on opposing parties
• See r 10.2.2 of the Uniform Conduct Rules (Solicitors) (textbook pg 323)
- Must avoid conflict between the duties owed to the clients
- Not act where there is a conflict or potential conflict of duties unless:
▪ Each client is aware the solicitor is acting for the other and has given their
informed consent to the arrangement
▪ Where the conflict arises in relation to the confidential information, an
effective information barrier has been established
Mallesons Stephen Jacques v KPMG Peat Marwick Ipp J:
the depatet as a fi of soliitos ad togethe to otai all the ifoatio ad othe
adatages of a pateship… it is theefoe ioguous to suggest that… the koledge
ad duties of etai pates i a fi… should e dioed fo the koledge ad
iteest of othe pates i the est of the fi
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (a firm) Ipp J took a less strict
approach:
The presumption of knowledge of one partner is to be regarded as knowledge of all partners
should be a rebuttable presumption
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Week 8 duty of loyalty: conflict of interest. Carindale country club estate pty ltd v astill (1993) 115 alr 112 at 118 per. Business practices, and not just information concerning legal issues: ausmedic. Australia pty ltd v whitely medical supplies pt ltd [2012] nswsc 1270; Personalities and reactions of participants: spincode pty v look software pty (2001) 4 vr 501 at [58]); Litigious strengths and vulnerabilities of former client : in the matter of edgecliff. Car rentals pty ltd (deregistered) [2017] nswsc 244. Uniform conduct rules (solicitors) r 11: adverse interests informed consent + satisfy duties, where actual conflict - could act for one with informed consent but may have to. Information barriers might be required r 11. 4. 2 cease both r 11. 5. Avoid conflict between duties owed to the clients. Must avoid conflict between the duties owed to the clients. Unioil international pty ltd v deloitte touche tohmatsu (a firm) ipp j took a less strict approach:
