FEDERAL COURT OF AUSTRALIA

Salfinger v Niugini Mining (Australia) Pty Ltd [2007] FCA 470

LEGAL PRACTITIONERS – two solicitors at Corrs Chambers Westgarth acted for applicant in earlier related litigation in Supreme Court of Queensland – Corrs ceased to act – the two solicitors moved to Blake Dawson Waldron, solicitors for first respondent – before commencement of present litigation in Federal Court the two solicitors left BDW – evidence of no discussion between the two solicitors and other solicitors at BDW – no documents brought by the two solicitors

Held:  application to restrain BDW for acting for first respondent dismissed

Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404 cited

Photocure ASA v Queen’s University at Kingston (2002) 56 IPR 86 cited

Bureau Interprofessionnel des Vins  de Bourgogne v Red Earth Nominees Pty Ltd [2002] FCA 588 applied

Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501 cited

Mintel International Group Ltd v Mintel (Australia) Pty Ltd (2000) 181 ALR 78 cited

Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 cited

Yunghanns v Elfic Ltd (unreported, Supreme Court of Victoria, Gillard J, 3 July 1998) cited

RODERICK NEIL SALFINGER v NIUGINI MINING (AUSTRALIA) PTY LTD & ANOR

VID 1388 OF 2006

HEEREY J

30 March 2007

MELBOURNE

THE COURT ORDERS THAT:

1.                  The applicant’s motion dated 16 February 2007 is dismissed with costs.

2.                  The Directions Hearing is adjourned to 5 June 2007 at 9.30 am.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The applicant Mr Roderick Salfinger seeks an order that the legal firm Blake Dawson Waldron (BDW) be restrained from acting for the first respondent Niugini Mining (Australia) Pty Ltd in this proceeding and from providing any information or disclosure on the business of the former company Arkaroola Resources Pty Ltd in respect of a certain proceeding in the Supreme Court of Queensland to any other legal practitioner or person. 

2                     BDW has never acted for Mr Salfinger or Niugini Mining.  However in the Queensland proceeding solicitors Mr Ray Lindwall and Ms Heidi Schweirkert, then at Corrs Chambers Westgarth, acted for Arkaroola and BDW acted for Niugini Mining.  Subsequently Mr Lindwall and Ms Schweikert moved to BDW, but they have since left that firm. 

The Queensland proceeding

3                     In January 2000, by an asset transfer deed, Niugini Mining transferred the Red Dome mine site and associated assets to Arkaroola.  On 18 December 2000 Niugini Mining terminated the deed because of alleged breaches by Arkaroola.  On 22 December 2000 Arkaroola commenced the Queensland proceeding against Niugini Mining alleging that the deed was improperly terminated.  In the present proceeding, commenced in the Federal Court on 18 December 2006, Mr Salfinger as assignee of Arkaroola and in his own right makes substantially the same claim against Niugini Mining.  He alleges unconscionable conduct, unjust enrichment and breaches of contract and fiduciary duty.

4                     On 3 January 2001, on Mr Lindwall’s application, an expedited timetable for delivery of pleadings in the Queensland proceeding, was directed.

5                     In March 2001 Corrs ceased to act for Arkaroola. 

6                     On 20 August 2001 Mr Lindwall left the Corrs partnership and became a partner at BDW.  Ms Schweirkert joined BDW at the same time as an employee senior associate.  Two other Corrs’ employees not involved in the Arkaroola matter, solicitor Thomas Boyd and articled clerk Thomas Vincent, also joined BDW about the same time.  It would seem that the four transferred from Corrs to BDW as a group.

7                     On 18 October 2001 Fryberg J struck out the Queensland proceeding on the ground of Arkaroola’s repeated failure to comply with directions of the Court concerning the prosecution of the action, and specifically its failure to provide affidavits and expert reports. 

Confidential information

8                     Mr Salfinger deposes that in late December 2000 and early January 2001 he had a number of discussions with Mr Lindwall and Mr Nicholas Andreatidis, another solicitor at Corrs, in relation to the deed and “in respect to providing extensive information about the affairs of Arkaroola with particular emphasis to (Niugini Mining)”.  He intended to make Mr Lindwall and Mr Andreatidis “aware of the affairs and business dealings of Arkaroola and (himself) so that they could properly represent Arkaroola in the then intended litigation”.  He goes on to say:

“These discussions covered many aspects of the operations of Arkaroola and various litigation strategies that we could use.  The discussions also included various personal issues and financial and asset status.  I understood that the discussions were held under solicitor client confidence.  On behalf of Arkaroola, I provided Corrs with an extensive brief on Arkaroola’s involvement with the deed and Red Dome.  This brief became part of the files of Corrs.”

He also deposes that his discussions:

“included confidential details of my then current business interests in North America and my current and former residential status in North America.”

Evidence of Mr Lindwall and Ms Schweirkert

9                     Between December 2000 and March 2001 Mr Lindwall was the partner at Corrs with responsibility for the Queensland proceeding, with the assistance of senior associates Mr Andreatidis and Ms Schweirkert.  As already mentioned, Corrs ceased acting for Arkaroola in March 2001.  Mr Lindwall believes that he did not have any further dealings with Arkaroola or Mr Salfinger after Corrs ceased to act for the company, apart from possible discussions in relation to unpaid accounts.

10                  Mr Lindwall joined BDW on 20 August 2001 and commenced work in the Litigation and Dispute Resolution Group.  When he left Corrs to join BDW he did not take any documents of any nature relating to Arkaroola, the Queensland proceeding or Mr Salfinger. 

11                  When Mr Lindwall joined BDW he advised Mr Guy Humble, the partner in charge of the Litigation and Dispute Resolution Group, that he had acted for Arkaroola at Corrs.  Mr Humble said he was aware of the matter but had no involvement with it as it was being handled by Mr Kimmins under the supervision of Mr John Briggs, a partner in BDW’s Resources Group.  Mr Lindwall and Mr Humble agreed that they would have no further discussion in relation to that matter.  This was the only discussion that Mr Lindwall had while at BDW about the Queensland proceeding.  He understood then, and understands now, that he has a professional responsibility as a solicitor to maintain the confidences of his previous clients notwithstanding that any retainer with him personally has terminated.

12                  Mr Lindwall had no involvement in the Queensland proceeding while at BDW.  He did not provide any information, document or thing relating to Arkaroola, Mr Salfinger or his partner Mr Barry Moshel to any person at BDW, either while he worked there or after he ceased to be a partner. 

13                  Mr Lindwall left BDW on 31 October 2005 and is now practising in partnership with Ms Schweirkert.  He has not discussed any matters relating to Arkaroola or Mr Salfinger with any person at BDW since leaving the firm (other than in relation to the preparation of his affidavit).

14                  Ms Schweirkert says that she assisted Mr Lindwall in relation to the Queensland proceeding while at Corrs.  She joined BDW as a senior associate on 20 August 2001 in the Litigation and Dispute Resolute Group. 

15                  When she left Corrs she did not take with her any documents of any nature relating to Arkaroola or the Queensland proceeding and those files and related documents remained with Corrs.  During the time she was a BDW she did not discuss the dispute involving Arkaroola, the Queensland proceeding or anyone concerned with that company with anyone at BDW except Mr Lindwall.  She had no involvement in the Queensland proceeding while she was at BDW.  She did not provide any information, document or thing relating to Arkaroola to any person at BDW whilst she worked at the firm or after she ceased to work there. 

16                  Ms Schweirkert ceased employment with BDW on 30 September 2005.

Evidence of solicitors at BDW

17                  Mr John Briggs was the partner at BDW responsible for the conduct of the Queensland proceeding.

18                  On 30 March 2001 he was informed by Mr Lindwall that Corrs had ceased acting for Arkaroola. 

19                  On 16 August 2001 BDW sent a fax to Mr Salfinger advising that from Monday 28 August 2001 Mr Lindwall would join BDW as a litigation partner in the Brisbane office.  The fax noted that previously Mr Lindwall was a partner at Corrs and at one stage provided advice to Arkaroola but that:

“Mr Lindwall would of course have no involvement in the Brisbane matter nor any future matters involving Arkaroola Resources.  Further Mr Lindwall will not be asked, nor will he comment on any matter associated with the present dispute.”

20                  Mr Briggs says that at no time did he discuss the Queensland proceeding, Arkaroola or Mr Salfinger with Mr Lindwall or Ms Schweirkert after they joined BDW.  He said that so far as he is aware no documents of any nature of any relevance to the Queensland proceeding or the present proceeding were brought across by Mr Lindwall or Ms Schweirkert to BDW. 

21                  At no time has Mr Lindwall, Ms Schweirkert, Mr Boyd or Mr Vincent or any other person retained by Arkaroola or Mr Salfinger provided confidential information to Mr Briggs regarding Arkaroola, Mr Salfinger or the Queensland proceeding.  Mr Lindwall, Ms Schweirkert, Mr Boyd and Mr Vincent had no involvement in the Queensland proceeding while they were at BDW. 

22                  Mr Michael Kimmins has been a partner with Corrs since approximately November 2001.  Between January 1991 and 26 October 2001 he worked at BDW as a solicitor, senior associate and then special counsel in the Dispute Resolution Group.  In 2001 at BDW he had the day to day conduct, on behalf of Niugini Mining, of the Queensland proceeding.  When Mr Lindwall and Ms Schweirkert joined BDW to the best of Mr Kimmins’ knowledge they had nothing to do with the Queensland proceeding.  The Niugini Mining file was located in Mr Kimmins’ office.  During the conduct of the Queensland proceeding he never spoke to or otherwise communicated with either Mr Lindwall or Ms Schweirkert about the proceeding.

23                  Mr Jeremy Chenoweth is a solicitor employed by BDW and, subject to Mr Lobban’s direction, has the conduct of the present Federal Court proceeding.  He has worked in the Litigation and Dispute Resolution Group within the Brisbane office of BDW since January 2005.  During his time with BDW Mr Chenoweth did not work with Mr Lindwall or Ms Schweirkert on any file.  They worked as a separate team within the Litigation and Dispute Resolution Group.  Mr Chenoweth did not have any involvement in the Queensland proceeding and did not work in the Brisbane office of BDW at the time of that proceeding.  Mr Chenoweth has never spoken to Mr Lindwall or Ms Schweirkert or otherwise communicated with them about the facts and circumstances of the Queensland proceeding, or about Arkaroola and Mr Salfinger or the dispute between Arkaroola and Niugini Mining.  His knowledge of the file has only arisen after the departure of Mr Lindwall and Ms Schweirkert from BDW.

24                  Mr Chenoweth has reviewed the material retained by BDW in respect of the Queensland proceeding.  The file is extensive and comprises fourteen boxes.  The only communications between any member of BDW and Mr Lindwall or Ms Schweirkert regarding the Queensland proceeding or in relation to Arkaroola apparent from the file occurred when Mr Lindwall was a partner at Corrs and Ms Schweirkert a senior associate at that firm and before Corrs ceased to act for Arkaroola.  There were no documents held in the files of BDW containing any material in any way relevant to the present proceeding that could be confidential to Arkaroola. 

25                  Mr Chenoweth arranged a search of BDW’s Keystone billing system which records time and narratives for time each person works on a file.  The system does not show any time recorded for Mr Lindwall or Ms Schweirkert on the file relevant to the Queensland proceeding or any file for Niugini Mining.

26                  Mr John Lobban is the partner at BDW in charge of the present Federal Court proceeding for Niugini Mining.  He did not have any involvement in the Queensland proceeding, although his advice may have been sought.  His involvement in the present matter arose only after the departure of Mr Lindwall and Ms Schweirkert from BDW.  He did not communicate with Mr Lindwall or Ms Schweirkert in respect of the Queensland proceeding.  He is not aware of BDW having possession of any documents or recording confidential information in respect of Arkaroola or Mr Salfinger and has no reason to believe the files of Arkaroola in respect of the Queensland proceeding did not remain at Corrs. 

27                  Mr Boyd had no involvement with any matter involving Arkaroola while at Corrs or at BDW.  He left BDW on 24 March 2006. He has kept in touch with Mr Thomas Vincent who has been employed by Deutsche Bank in London since April 2004.

Restraining solicitors from acting

28                  In recent times applications to restrain solicitors from acting against clients or former clients have arisen not infrequently and have been the subject of detailed consideration in Australian courts, in particular in Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501 (Victorian Court of Appeal), Bureau Interprofessionnel des Vins  de Bourgogne v Red Earth Nominees Pty Ltd [2002] FCA 588 (Ryan J), Photocure ASA v Queen’s University at Kingston (2002) 56 IPR 86 (Goldberg J) and Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404 (Young J).  The leading English authority is the House of Lords’ decision in Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222.

29                   It is not necessary to review these authorities in detail.  The issues calling for resolution in the present case are within a short compass.

30                  Since BDW never acted for Mr Salfinger or Arkaroola, and indeed have always acted against them, this case does not present the situation of a solicitor acting against a present or former client. 

31                  I will assume for present purposes that Mr Salfinger has made out a case with sufficient particularity that confidential information concerning his affairs and those of Arkaroola passed into the possession of Mr Lindwall and Ms Schweirkert when they were at Corrs.  Such confidential information would extend to what Gillard J in Yunghanns v Elfic Ltd (Supreme Court of Victoria, unreported, 3 July 1998) has characterised as the “getting to know you” factors.  His Honour said at 10-11:

“In some cases the circumstances of the retainer and the nature of the legal work will be sufficient to establish the nature of the confidential information. In this regard the relationship between solicitor and client may be such that the solicitor learns a great deal about his client, his strengths, his weaknesses, his honesty or lack thereof, his reaction to crisis, pressure or tension, his attitude to litigation and settling cases and his tactics.  These are factors which I would call the ‘getting to know you’ factors.  The overall opinion formed by a solicitor of his client as a result of his contact may in the circumstances amount to confidential information that should not be disclosed or used against the client.”

See also Mintel International Group Ltd v Mintel (Australia) Pty Ltd (2000) 181 ALR 78 at [37]-[44].

32                  However, the critical question is whether the knowledge of Mr Lindwall and Ms Schweikert should be imputed to other lawyers at BDW.  In Red Earth at [34] Ryan J said:

“It is now well established that the knowledge of a solicitor joining a new firm should not automatically be imputed or attributed to other lawyers or employees at that firm (see Re a Firm of Solicitors [1992] QB 959 at 973, per Staughton LJ; Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 17 WAR 98, per Ipp J at 110-111; Newman v Phillips Fox (1999) 21 WAR 309, per Steytler J; Bolkiah (supra) at 235). As Lord Millett said in Bolkiah, whether a particular individual is in possession of confidential information is a question of fact to be proved or inferred from the circumstances of the case: (Bolkiah at 235. See also the observation of Steytler J in Newman v Phillips Fox (supra)at 317).

33                  Applying that principle, and assuming the onus is on BDW, I am satisfied that no relevant information was passed on to anyone at BDW.  The detailed evidence both from Mr Lindwall and Ms Schweirkert and from solicitors at BDW, the veracity of which was not challenged, enables that conclusion to be safely drawn.  The circumstances point the same way.  A large and reputable firm like BDW would be aware of the obvious potential conflict when a solicitor previously acting on the other side of litigation has joined them.  This would be clear, notwithstanding that Corrs had ceased acting for Arkaroola some six months earlier.  So there was all the more reason to take positive steps, such as notifying the former client of Mr Lindwall and going out of their way to ensure that he had nothing to do with any matters relating to that client. 

34                  As events have turned out, Mr Lindwall and Ms Schweikert left BDW before the present Federal Court litigation commenced so the risk of even accidental communication of relevant information hereafter can be ignored.

35                  Mr Salfinger raised one particular matter.  In early January 2001 he retained Mr David Finney of C & B Consultants of Cairns to prepare an expert’s report and supporting affidavit for the Queensland proceeding.  On Mr Salfinger’s instructions Mr Lindwall and Mr Andreatidis prepared a brief for Mr Finney which contained confidential information and sent it to him on 9 March. 

36                  Mr Salfinger called Mr Finney in July and August 2001 to request the affidavit and again in September when he was given an “evasive response” and was told that C & B was not now willing to provide the affidavit and report.

37                  On 4 September 2002, ie a year later, he called C & B to see if it were possible to get the affidavit in support of their report.  On the same day he received a fax from C & B stating that they were now able to provide the affidavit to support the report.  It stated:

“Rod, Further to or discussion today, please note that C & B will prepare an affidavit to support the 2001 Tailings Dam Seepage Contamination Report and follow up letter report of 10 January 2002, however because of our conflict of interest concern, we could only undertake the work after completion of our current Niugini Mining project.  This project is likely to be    completed in 4 weeks”

38                  I do not see how this matter is relevant to the present application.  It would appear that C & B provided some kind of report in early 2002 but by this time Corrs had ceased to act for Arkaroola and Mr Lindwall and Ms Schweikert had left Corrs.

39                  I order that:

1.                  The application be dismissed with costs. 

2.                  The Directions Hearing be adjourned to 5 June 2007 at 9.30 am.

Associate:

Dated:         30 March 2007