JOHN ARTHUR WRIGHT v. HAMPTON WINTER & GLYNN (a firm) AND ANOTHER

HCA 2522/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2522 OF 2007

______________________

______________________

____________________________________

REASONS FOR DECISION

____________________________________

Introduction

1.  This was the plaintiff’s application for an interlocutory injunction enjoining the defendants from acting as the solicitors for the petitioner in a divorce petition.

2.  At the end of the hearing on 7 December 2007, I dismissed this application with costs to the defendants.  The following are the reasons for the decision.

Background

3.  Part of the background leading to this application is undisputed and can be shortly stated as follows.

4.  The plaintiff and the petitioner are husband and wife having been married in 2001.  The petitioner filed a divorce petition in May 2007.

5.  The 1^st defendant (“D1”) is a firm of solicitors while the 2^nd defendant (“D2”) is a partner of D1.  They have acted as the petitioner’s solicitors in the divorce since its commencement.

Disputed Facts

6.  The plaintiff alleged that he had been represented by D1 in the following matters:-

(a)	discussions in early 2000 regarding the plaintiff’s will and the guardianship of the children;
(b)	discussions in the summer of 2000 relating to the same matters;
(c)	meetings prior to 2001 relating to the plaintiff’s estate planning and guardianship;
(d)	meeting in 2001 regarding the guardianship of children;
(e)	discussion in 2002 regarding the adoption of a child;
(f)	discussion in May 2004 regarding the plaintiff’s estate planning.  The plaintiff’s schedule of assets was given to D2.  The plaintiff also outlined his asset locations and corporate holdings;
(g)	meeting in June 2004 regarding the plaintiff’s estate planning and will.  The plaintiff later sought advice from overseas lawyers about these.

In addition, the plaintiff and D1 have kept a social relationship since 1998 or 1999.

7.  The defendants denied the plaintiff has ever been their client, or that there was a social relationship.  In particular:-

(1)	D2 has only given legal advice to the petitioner but not the plaintiff.  She has never received any information from the plaintiff;
(2)	D2 has not given any financial or tax advice to the plaintiff;
(3)	D2 introduced the plaintiff to a partner of D1 in June 2004.  That partner sought asset information from the plaintiff but that was never supplied.  The plaintiff was advised it would be better for his will to be dealt with in the US.

Applicable Legal Principles

8.  This is one of those rarer occasions where the applicable legal principles (relating to when a lawyer should not act for a party) are disputed.

9.  The gist of the plaintiff’s case was founded on the following passages in the judgment of In Marriage of Thevenaz (1986) WL 591117:-

“	The circumstances are that the firm … acted for the family consisting of the husband and wife in relation to the acquisition of a house … in about 1978, again in respect of the sale of that property in 1981 and again in respect of the purchase of the property … early in 1982.
	…
	The husband complains of Mr Dezarnaulds, who was a member of the former firm, acting on behalf of the wife.  He relies upon the possibility of confidences having been exchanged between him and the firm during the previous dealings …
	[The husband’s contentions are that the knowledge acquired, his personality and his financial position could be seen to give the wife an unreasonable advantage in opposing his claims, and that the knowledge and information in the possession of the wife’s solicitors might be used to his detriment in the course of cross-examination.  The husband has not asserted any specific confidence]
	The firm … was dissolved on 21 March 1986.  The solicitor who previously handled the conveyancing transactions … was Mr Halliday.  He is no longer in partnership with Mr Dezarnaulds.
	Mr Dezarnaulds maintains that he has no independent knowledge … Until coming to court today he had no knowledge in relation to the files [relevant to the previous dealings] and had never met [the husband].  That situation is accepted.
	…
	It is my view that in this case Mr Dezarnaulds should not continue to act on behalf of [the wife].  It may well be that the risks were he to do so are more theoretical than practical … It is of the utmost importance that justice should not only be done but should appear to be done.  In the circumstances of the present case, there is a risk which may well be merely theoretical but still exists, that justice might not appear to be done” (emphasis supplied).

Reliance was also placed on similar remarks in the decision in McMillan v. McMillan (1999) WL 33447078.

10.  In short, the plaintiff argued that a mere risk of prejudice of confidential information being used to his disadvantage (even if theoretical) is sufficient to justify the court’s intervention; this is because the test should be based on perceived justice.

11.  The defence denied that should be the proper test, and contended that the test should be that adopted by the courts in England.

12.  Before examining what those courts said, it should be noted there is a difference between the court’s intervention of legal representation in a case where a solicitor acts for two current clients and a case where his current client’s interest is or may be adverse to that of a former client.  This application was concerned with the latter case.

13.  It was said in the Hong Kong Court of Appeal’s judgment in Nishimatsu-Costain-China Harbour Joint Venture v. Ip Kwan & Co. [2001] 1 HKLRD 84:-

“	The objection in the present case is that … [the solicitors have] a conflict of interest [in acting for two current clients] … It is not alleged that [the solicitors are] in possession of confidential information which the joint venture objects to being passed to the insurer … The distinction between an objection arising on the footing of a conflict of interest … and an objection based upon confidential information was emphasised in the case of HRH Prince Jefri Bolkiah v. KPMG [1999] 2 AC 222 … ” (per Rogers JA (as he then was) pp. 92-93);
“	A solicitor will often be precluded from accepting instructions from a new client with interests adverse to those of a former or present client because he has been entrusted by the original client with material confidential information.
	In HRH Prince Jefri Bolkiah v. KPMG … Lord Hope of Craighead put the solicitor’s duty in relation to confidential information as follows (at p. 227):
		A solicitor is under a duty not to communicate to others any information in his possession which is confidential to the former client.  But the duty extends well beyond that of refraining from deliberate disclosure.  It is the solicitor’s duty to ensure that the former client is not put at risk that confidential information … may be used against him in any circumstances … Particular care is needed if the solicitor agrees to act for a new client who has … an interest which is in conflict with that of the former client.  In that situation the former client is entitled to the protection of the court if he can show that his solicitor was in receipt of confidential information which is relevant to a matter for which the solicitor is acting, against the former client’s interest, for a new client” (emphasis supplied) (per Ribeiro JA (as he then was) p. 100).

14.  Apart from the passage in Bolkiah which has been referred to in Ip Kwan & Co., Lord Millet said this in his judgment in Bolkiah:-

“

In Rakusen’s case the Court of Appeal founded the jurisdiction on the right of the former client to the protection of his confidential information.  This was challenged by counsel for Prince Jefri, who contended for an absolute rule, such as that adopted in the United States. … In the course of argument, however, he modified his position … This makes the possession of relevant confidential information the test of what is comprehended within the expression ‘the same or a connected matter.’  On this footing the court’s intervention is founded not on the avoidance of any perception of possible impropriety but on the protection of confidential information.

My Lords, I would affirm this as the basis of the court’s jurisdiction to intervene on behalf of a former client … ” (emphasis supplied) (p. 234).

Later on in the judgment he said:-

“

Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him … and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own” (emphasis supplied) (p. 235).

The requisite degree of risk of misuse of the confidential information has also been discussed:-

“

Many different tests have been proposed in the authorities.  These include the avoidance of ‘an appreciable risk’ or ‘an acceptable risk.’  I regard such expressions as unhelpful; the former because it is ambiguous, the latter because it is uninformative.  I prefer simply to say that the court should intervene unless it is satisfied that there is no risk of disclosure.  It goes without saying that the risk must be a real one, and not merely fanciful or theoretical.  But it need not be substantial … ” (pp. 236-7).

15.  The English Court of Appeal in Lee & Co. v. Coward Chance [1991] Ch 259 (an authority cited by counsel in Bolkiah but not referred to by the court in that appeal) said expressly:-

“	I was referred to certain North American and New Zealand authorities as to the circumstances in which the court would intervene. … That is not the law of this country” (p. 268).

16.  I agree with the defence and disagree with the plaintiff.  Similar to the courts in England, I find no justification for adopting either an absolute rule, or a test based on perceived justice.

17.  Such being the conclusion I reached on the law, and when understood properly in such legal context, the plaintiff’s reliance on the Hong Kong Law Society’s “The Hong Kong Solicitors Guide to Professional Conduct”, Vol. 1, 2^nd Ed., Ch. 9, para. 9.02 and commentary 3 cannot take his case any further:-

“

If a solicitor or his firm has acquired relevant confidential knowledge concerning an existing or former client … he must not accept instructions where it is likely that he would be duty bound to disclose or use such relevant confidential information in breach of his duty of confidentiality to such client … ” (emphasis supplied).

Findings

18.  The confidential information relied upon by the plaintiff is his schedule of assets, and discussions regarding estate planning.  The plaintiff deposed in his supporting affidavit:-

“	In May 2004, [the petitioner] and I met [D2] to discuss matters on estate planning.  During this meeting I provided my schedule of assets together with my wills …
	At the same meeting … I also consulted [the defendants] about ‘estate planning and personal and corporate asset arrangement’ where I outlined to [D2] what my assets were and my corporate holdings.
	On 18 June 2004, … [the petitioner] and I met Mr. Vanky Mak of [D1] for discussions on matters relating to estate planning following which advice was provided on wills, estate planning and following [the petitioner] and I together sought advice from overseas lawyers … ” (para. 23 to 25).

19.  I agree with the defence that the plaintiff’s assertion he had given a schedule of assets to the defendants has been cast in doubt by Vanky Mak’s e-mail dated 2 July 2004 where he wrote:-

“	… it would assist me if I can have from you a list of assets to be included under the provisions of the Will, and the jurisdictions in which they are located”.

20.  In gist, Vanky Mak’s e-mail informed the plaintiff of the rate of D1’s professional charges for carrying out estate planning for the plaintiff.  It can be inferred that no work has in fact been carried out at that stage.  The plaintiff’s assertion that advice was earlier given by the defendants about estate planning has also been cast in doubt by the contents of this e-mail.

21.  I reject the plaintiff’s said assertions.  Hence, the only reasonable conclusion is that the plaintiff has not established the defendants were “in possession of information confidential to him” (albeit the threshold of proof in this application is much lower than that at trial).  In this connection, both parties accepted that because any injunction granted in this application would have the effect of finally disposing of this action, the likelihood of the plaintiff’s success in this action is a relevant factor: NWL Ltd. v. Woods [1979] 1 WLR 1294, 1306-7.

Other Matters

22.  The defence has put forth respectable arguments as regards two other matters:-

(a)	the timing of this application shows that it was merely a delaying tactic.  The plaintiff did not make the application until shortly before the hearing in the Family Court concerning the petitioner’s application for further disclosure by the plaintiff;
(b)	parties who grant a joint retainer to solicitors do not retain any confidence as against one another: The “Sagheera” [1997] 1 Ll Rep 160, 165; Re Konigsberg (A Bankrupt) [1989] 1 WLR 1257, 1265.

23.  However, because this application can be determined without the need to consider the above matters, no definitive decision has been made thereon.

Costs Order

24.  The plaintiff sensibly (and correctly) did not object that the costs of this application should follow the event.