FEDERAL COURT OF AUSTRALIA

Nash v Timbercorp Finance Pty Ltd (in liq), in the matter of the bankrupt estate of Nash [2019] FCA 957

ORDERS

THE COURT ORDERS THAT:

1.    Paragraph 1 of the interim orders sought by Richard Robert Nash (Mr Nash) is dismissed.

2.    The respondents to the interim application by Mr Nash (collectively, liquidators), whether by themselves, their servants, agents or howsoever otherwise, be restrained from continuing to retain:

(a)    Stuart Lewin (Mr Lewin), a Partner of Mills Oakley Lawyers (Mills Oakley); and

(b)    Alison Malek, Justin Davidson, Amy Carruthers and Dona Hansani, each in the employ of Mills Oakley,

(collectively, Restrained Persons) from having any involvement whatsoever with the examination of Mr Nash ordered in these proceedings by Registrar Allaway on 19 July 2018 (Richard Nash Examination).

3.    The liquidators, whether by themselves, their servants, agents or howsoever otherwise, be restrained from continuing to retain the Restrained Persons to give them advice in relation to any matter in respect of the Richard Nash Examination.

4.    The liquidators' solicitors, Mills Oakley, provide undertakings to the Court for each solicitor, law clerk or other team member previously or currently involved in the Richard Nash Examination, except for the Restrained Persons, (collectively, Revised Examination Lawyers) substantially in the form of the undertaking set out in Annexure “SAL-67” to the affidavit of Mr Lewin sworn 16 May 2019 (first Lewin affidavit).

5.    Each solicitor, law clerk or team member at Mills Oakley that becomes involved in the Richard Nash Examination (New Examination Lawyer) must provide an undertaking to the Court substantially in the form of the undertaking set out in Annexure “SAL-67” to the first Lewin affidavit.

6.    The liquidators' solicitors, Mills Oakley, provide undertakings to the Court for each person identified as a current partner of, or person currently employed by, Mills Oakley in the table set out in Annexure “SAL-65” to the first Lewin affidavit as having previously been involved in any matter on behalf of Mr Nash, Stellar Finance Pty Ltd (ACN 098 500 362) and/or Kenneth Robert Nash (collectively, Continuing Lawyers) substantially in the terms of the undertaking set out in Annexure “SAL-66” to the first Lewin affidavit.

7.    The liquidators’ solicitors, Mills Oakley, undertake to the Court to implement an information barrier substantially in accordance with the Law Institute of Victoria's Information Barrier Guidelines adopted on 20 April 2006, being Annexure “SAL-64” to the first Lewin affidavit, for the purpose of safeguarding against the risk of the flow of confidential information of Mr Nash between, on one side, the Continuing Lawyers and the Restrained Persons and, on the other side, the Revised Examination Lawyers and any New Examination Lawyers.

8.    The parties are to bear their own costs of and incidental to this application.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ANDERSON J:

Introduction and summary

1    Richard Robert Nash (Mr Nash), a bankrupt, is currently an examinee in a public examination under s 81 of the Bankruptcy Act 1966 (Cth) (Act) initiated by Timbercorp Finance Pty Ltd (in liq) and its liquidators (collectively referred to herein as the liquidators). Mr Nash applies by way of interim application to restrain the liquidators from continuing to retain Mills Oakley Lawyers (Mills Oakley), a firm of solicitors, as their legal representatives for the remainder of his examination.

2    Mr Nash contends that, as a result of Mills Oakley previously acting for him and an associated company, Mills Oakley ought to be restrained from acting for, or providing advice to, the liquidators in relation to his examination. He also seeks access to the affidavit of Craig Peter Shepard, one of the liquidators, in support of the application for summons for examination (liquidator’s affidavit).

3    For the reasons expressed below, Mills Oakley may continue to act for, and advise the liquidators in respect of the examination of Mr Nash, but only on the strict conditions expressed in my orders set out above at pages i-iii. These conditions may be broadly summarised as follows:

(1)    first, the liquidators are restrained from continuing to retain Stuart Lewin (Mr Lewin), a Partner of Mills Oakley, and Alison Malek (Ms Malek), Justin Davidson (Mr Davidson), Amy Carruthers (Ms Carruthers) and Ms Dona Hansani (Ms Hansani), each in the employ of Mills Oakley, in respect of the examination. As explained below, each have read documents which are confidential to Mr Nash and in respect of which there is a real risk of relevance to his examination; and

(2)    secondly, Mills Oakley is required to implement an information barrier for the purpose of safeguarding against the risk that the members of Mills Oakley involved in the examination of Mr Nash will become aware of confidential information imparted by Mr Nash to other members of Mills Oakley in the course of previous matters in which the firm acted for him. Various members of Mills Oakley will be required to provide undertakings to the Court to give effect to this information barrier.

4    Finally, Mr Nash is not entitled to access the liquidator’s affidavit. To permit such access would materially frustrate the purposes for which his examination is held.

Background

5    Mr Nash relies upon affidavits sworn by him on 10 April and 31 May 2019 in support of his application. The liquidators rely upon the affidavits of Mr Lewin sworn 16 May 2019 (first affidavit), 5 June 2019 and 13 June 2019 (third affidavit). The key factual matters from those affidavits are summarised as follows.

6    Mr Nash is married to Elizabeth Nash. His parents are Kenneth Nash and Gail Nash.

7    Mr Nash is a former director and company secretary of Stellar Finance Pty Ltd (Stellar Finance). The history of the company reveals that:

(a)    from 8 November 2001, being the date of incorporation of Stellar Finance, to 2 April 2002, Mr Nash and Neil Smoli (Mr Smoli) were the directors and company secretaries of Stellar Finance;

(b)    from 2 April 2002 until 27 May 2003, Mr Nash and Kenneth Nash were the directors and company secretaries;

(c)    from 27 May 2003 until 1 August 2016, Mr Nash was the sole director and sole company secretary;

(d)    from 1 August 2016, Elizabeth Nash became the current sole director and sole company secretary; and

(e)    Stellar Finance is and was at all relevant times a private company. Nash Family Holdings Pty Ltd is the sole shareholder of Stellar Finance. Each of Mr Nash, Mr Smoli and Kenneth Nash were previously shareholders of Stellar Finance.

8    Stellar Finance formerly traded as a mortgage manager and broker. The loan book of Stellar Finance was sold in 2013 and the company has since been dormant.

Mills Oakley’s previous matters for Mr Nash and Stellar Finance

9    Mills Oakley has previously acted for Mr Nash and Stellar Finance in a number of matters, both contentious and non-contentious, between about 2001 and 2009.

10    Mills Oakley advised and acted for him and/or Stellar Finance in six contested matters (collectively, Previous Contentious Matters) as follows:

(a)    the “Smoli Dispute” between about 2001 and 2008;

(b)    the “Van Prooyen Dispute” between 2004 and 2005;

(c)    the “Gateway Dispute” during 2006;

(d)    the “Vero Dispute” between 2007 and 2008;

(e)    the “Gaynor Dispute” between 2007 and 2008; and

(f)    the “Hawthorn East Lease Dispute” between about mid-2007 and 2009.

11    Mr Nash alleges that the following partners and employees of Mills Oakley were involved in the Previous Contentious Matters:

(a)    Smoli Dispute: Partners Mr Lewin, Roger Jepson (Mr Jepson) and Andrew Brown (Mr Brown) (all current Partners of Mills Oakley), Senior Associates Louise Gehrig (Ms Gehrig) and James Tobin (Mr Tobin) (the latter now a Partner of Mills Oakley), and Lawyer Jarrod Munro (Mr Munro);

(b)    Van Prooyen Dispute: Partner Mr Jepson (current Partner of Mills Oakley) and Solicitor Peter Bradley;

(c)    Gateway Dispute: Partner Mr Jepson (current Partner of Mills Oakley) and Senior Associate Ms Gehrig;

(d)    Vero Dispute: Partners Mr Jepson and Mr Brown (both current Partners of Mills Oakley), Senior Associates Ms Gehrig and Mr Tobin (the latter now a Partner of Mills Oakley), and Lawyer Mr Munro;

(e)    Gaynor Dispute: Partners Mr Jepson and Mr Brown (current Partners of Mills Oakley), Senior Associate Mr Tobin (now a Partner of Mills Oakley), and Articled Clerk Eliza Garrett; and

(f)    Hawthorn East Lease Dispute: Partner Mr Jepson (current Partner of Mills Oakley) and Senior Associate Ms Gehrig. Current Partners Mr Lewin and Mr Brown were also identified in the relevant costs agreement and disclosure statement as “likely to be involved in this work”.

12    Mr Nash also alleges that Mills Oakley advised and acted for Stellar Finance in a number of non-contentious matters (collectively, Previous Non-Contentious Matters) including:

(a)    advice and preparation of mortgage documents on behalf of lenders as instructed by Stellar Finance acting as manager of mortgages under authority between about July 2003 and about June 2006. Mr Nash deposes that “[t]his involved what is likely hundreds of files as a file was opened for each transaction”;

(b)    advice and preparation of a Trading Agreement between Stellar Finance and an estate agent M.P.R.E. Pty Ltd in about January 2004;

(c)    advice and preparation of a Loan Consultant Agreement for Stellar Finance to enter into with loan consultants, in or about August 2004;

(d)    advice and preparation of an Employment Agreement for Stellar Finance to enter into with its employees, in or about August 2004;

(e)    advice and preparation of a Broker Agreement to be entered into between Stellar Finance and brokers accredited by Stellar Finance in or about August 2004; and

(f)    review of Stellar Finance’s Aggregator Agreement and that Broker Agreement, in or about December 2005.

13    Mr Nash alleges that the partners and employees of Mills Oakley involved in the Previous Non-Contentious Matters were at least the following: Managing Partner Stephen Moulton, Senior Solicitor Blair Trask, and Solicitor Carolyn Falcone and another unnamed Employment Law Partner from Mills Oakley.

14    Mr Lewin disputes Mr Nash’s allegation that he was involved in the Smoli Dispute. Mr Lewin deposed in his first affidavit that he has no recollection of having any involvement in any previous matters for Mr Nash or Kenneth Nash. There is also a factual dispute in the evidence as to the contact Mr Lewin had with Mr Nash at a golf game and at the creditor’s meeting of Mr Nash on 6 April 2019. In short compass, I am not satisfied on the evidence before me that Mr Lewin was involved in the Smoli Dispute.

15    Accordingly, the partners and employees of Mills Oakley that are accepted as having acted for Mr Nash in the Previous Contentious Matters and Previous Non-Contentious Matters (collectively, Previous Matters), but remain in the employ of Mills Oakley as at the date of Mr Lewin’s first affidavit, are the following (with his or her current title):

(a)    Mr Tobin, Partner;

(b)    Mr Jepson, Partner;

(c)    Mr Brown, Partner;

(d)    Mr Warren Scott, Partner;

(e)    Ms Jacinta Bloomfield (now Jacinta Miskulin), Law Clerk; and

(f)    Ms Stella Mascoulis, Law Clerk,

(collectively, Continuing Lawyers).

Mills Oakley’s files in relation to the Previous Matters

16    Mr Lewin deposed in his first affidavit that Mills Oakley’s files in relation to the majority of the Previous Contentious Matters, being the Smoli Dispute, Gateway Dispute, Vero Dispute and Gaynor Dispute, had been destroyed. Mr Lewin’s evidence was that Mills Oakley either never maintained any file in relation to the Hawthorn East Lease Dispute, or its file was the same as the file in relation to the Smoli Dispute, which has since been destroyed. Mr Lewin’s evidence is that, given the age of the final contentious matter, the Van Prooyen Dispute, it is likely Mills Oakley’s files in relation to that matter have also been destroyed.

17    Mr Lewin deposed in his first affidavit that it is likely Mills Oakley’s files in relation to the Previous Non-Contentious Matters were concluded and closed prior to January 2008. Mills Oakley’s files in relation to the additional retainers between Mills Oakley and Kenneth Nash or Shanco Holdings Pty Ltd, relating to wills and enduring powers of attorney and the variation of the Marie Joyce Nash Trust, have been closed and destroyed.

18    At the first hearing day of the interim application for an injunction on 12 June 2019, I raised with counsel for the liquidators that Mr Lewin’s affidavit material was deficient in that he referred to the archiving and destruction of physical files but made no reference to whether Mills Oakley possessed any electronic files in respect of the Previous Matters. I directed that the liquidators put on an affidavit deposing to the existence or not of such files in Mills Oakley’s possession.

19    On 13 June 2019, Mr Lewin swore his third affidavit in which he deposed to having conducted searches of Mills Oakley’s electronic files for the Previous Matters. That search revealed a total of 112 electronic files (Electronic Files), comprising 341 pages, having been located in relation to six out of the 14 identified Previous Matters. The Electronic Files comprise six emails and 106 other electronic documents. According to Mr Lewin’s affidavit, Mills Oakley have no electronic files for the remaining eight matters.

20    Mr Lewin exhibited to his third affidavit a schedule of the Electronic Files. That schedule itemised the files in relation to the relevant Previous Matters as follows:

(a)    Mr Nash – Smoli Dispute – 16 electronic files;

(b)    Mr Nash – Gateway Dispute – 8 electronic files;

(c)    Stellar Finance Pty Ltd – Vero Dispute – 42 electronic files;

(d)    Stellar Finance Pty Ltd – Gaynor Dispute – 6 electronic files;

(e)    Kenneth Nash – Estate Planning Advice – 25 electronic files; and

(f)    Shanco Holdings – Trust, Superannuation and Estate Advice – 15 electronic files.

21    The matters deposed to by Mr Lewin in his third affidavit must be contrasted against the matters he deposed to in his first affidavit. In his first affidavit, Mr Lewin deposed that the firm’s file in respect of the Smoli Dispute was closed in April 2009, archived on or about May 2009 and destroyed in May 2016. Mr Lewin’s first affidavit failed to disclose the 16 electronic files in relation to the Smoli Dispute in Mills Oakley’s possession.

22    Likewise, Mr Lewin in his first affidavit deposed to the firm’s file in respect of the Gateway Dispute was closed in January 2008, archived on or about January 2008 and destroyed in or about January 2015. Again, Mr Lewin’s first affidavit failed to disclose the eight electronic files in relation to the Gateway Dispute in Mills Oakley’s possession.

23    The fact that Mills Oakley had electronic files in respect to the relevant Previous Matters in which it previously acted for Mr Nash, Kenneth Nash and entities related to them, is a matter which should have been deposed to by Mr Lewin in his first affidavit. This is particularly the case when Mr Nash’s solicitors had asked specifically in a letter dated 26 March 2019 for email correspondence with respect to the Smoli Dispute and another matter. The failure of Mr Lewin to refer to the Electronic Files in his first affidavit created a false impression that there were no electronic files in Mills Oakley’s possession.

24    Moreover, as will become relevant, I take it from Mr Lewin’s third affidavit that, in conducting the searches of Mills Oakley’s files, and exhibiting a schedule itemising the Electronic Files, Mr Lewin has viewed the Electronic Files himself. The same can be said in part for Ms Carruthers whose name is on the top of one of the emails that forms part of the copies of the Electronic Files tendered to the Court. This indicates that Ms Carruthers printed out that document.

25    In the course of the second hearing day, being 18 June 2019, counsel of Mr Nash also tendered as Confidential Exhibit N2 a cover email which attached a spreadsheet. The attached spreadsheet relates to the Gateway Dispute and may broadly be described as a spreadsheet setting out information in relation to payments of commission to Mr Nash (Gateway Spreadsheet). The cover email was sent on 11 June 2019 by Alison Malek (Ms Malek), a Senior Associate at Mills Oakley, to the solicitors for Mr Nash. Copied to the email was Mr Lewin, Ms Carruthers, Mr Davidson, a Lawyer at Mills Oakley, and Ms Hansani, a Legal Assistant at Mills Oakley. I take it from this correspondence that Mr Lewin, Ms Malek, Ms Carruthers, Mr Davidson and Ms Hansani have viewed the Gateway Spreadsheet.

Events since the Previous Matters

26    Mills Oakley has acted for the liquidators since 23 April 2009. In particular, Mills Oakley acted for the liquidators in a proceeding in the Supreme Court of Victoria against Mr Nash (Supreme Court proceeding) since September 2014. That proceeding has been stayed since 20 October 2017 until notice to the court by the liquidators that the proceeding is to be listed for further directions.

27    The liquidators allege that at no time during the course of the Supreme Court proceeding did Mr Nash or his legal representatives assert that Mills Oakley had a conflict in continuing to act for the liquidators against him.

28    On 8 August 2016, Mr Nash became bankrupt on his own petition.

29    On 19 July 2018, a Registrar of this Court ordered pursuant to s 81 of the Act that summonses for examination be issued directed to various examinees including Mr Nash (Summons). The Summons prescribed that the relevant period for the examination of Mr Nash is from 1 July 2006 to the date of the Summons (Examination Period).

30    The summons addressed to Mr Nash was served on 26 July 2018. On 6 September 2018, Mills Oakley received a letter from Nerlich Lawyers, acting on behalf of Mr Nash, which for the first time raised the alleged conflict of interest on the part of Mills Oakley acting for the liquidators.

31    On 12 September 2018, Mr Nash’s examination commenced before a Registrar of this Court. At the initial examination, counsel who appeared for Mr Nash, Mr Dyrenfurth, raised the alleged conflict of interest in relation to Mills Oakley acting for the liquidators. However, no application was made to the Registrar at that time to restrain Mills Oakley from continuing to act.

32    Mr Nash produced various documents to the Court on 12 September 2018, 18 October 2018, 7 November 2018 and 20 December 2018 in response to the Summons. In total, in excess of 23,000 documents have been produced in this proceeding by Mr Nash and other related examinees, Elizabeth Nash, Kenneth Nash, Peter Lentin and Nicholas Giasoumi.

33    On 23 November 2018, the examination of Mr Nash resumed and he was examined for almost two hours. Mr Nash was examined in relation to substantive matters such as his bank accounts and various loans.

34    On 7 March 2019, almost six months after the examination of Mr Nash commenced, Mr Nash filed an application with the Law Institute of Victoria (LIV), entitled “Request for Ethics Committee Rulings”, seeking a non-binding ruling from the LIV Ethics Committee (Ethics Committee) in relation to Mills Oakley’s alleged conflict of interest.

35    On 25 March 2019, the Ethics Committee issued its ruling. The Ethics Committee determined that a conflict of interest existed on the basis of confidential information obtained by Mills Oakley from Mr Nash in the course of the Previous Matters. However, the Ethics Committee expressed that it was a matter for the Court whether Mills Oakley should consequently be restrained from acting for, or advising, the liquidators in relation to the examination of Mr Nash.

36    The examination of Mr Nash, which was listed to resume on 27 and 29 March 2019, was adjourned at the application of Mr Nash so that an application to this Court for injunctive relief could be issued by Mr Nash.

37    Mr Lewin in his first affidavit deposed that none of the Continuing Lawyers have been involved in acting for the liquidators in respect of the examination. Mr Lewin’s evidence is that the solicitors and law clerks currently acting in respect of the examination are:

(a)    Mr Lewin, Partner;

(b)    Ms Malek, Senior Associate;

(c)    Ms Jennifer O’Farrell, Senior Associate;

(d)    Mr Davidson, Lawyer;

(e)    Ms Carruthers, Law Clerk; and

(f)    Ms Hansani, Legal Assistant,

(collectively, Examination Lawyers).

38    Mr Lewin deposes that apart from himself, none of the practitioners listed above as Examination Lawyers were employed by Mills Oakley during the period that Mills Oakley acted for Mr Nash, Stellar Finance and/or Kenneth Nash in the matters said to give rise to the conflict of interest.

39    Mr Nash issued this interim application on 10 April 2019. To summarise, this date is:

(a)    more than four years after Mills Oakley acted for the liquidators and commenced Supreme Court proceedings against Mr Nash in September 2014;

(b)    almost nine months after the summons for examination was served on Mr Nash in July 2018; and

(c)    approximately seven months after his examination had first commenced in September 2018.

Interim application

40    Mr Nash’s interim application seeks the following orders:

1.    [Mr Nash] legal representatives be granted access, at the hearing of this application, to the affidavit/s in support of the application for summons for examination relating to [Mr Nash].

2.    An order that the [liquidators], whether by themselves, their servants, agents or howsoever otherwise, be restrained from continuing to retain [Mills Oakley] as their solicitors for the remainder of the examination of [Mr Nash].

3.    Further or alternatively to 2. above, an order that the [liquidators], whether by themselves, their servants, agents or howsoever otherwise, be restrained from retaining [Mills Oakley] to give advice in relation to matters arising out of the examination of [Mr Nash].

4.    The [liquidators] pay [Mr Nash]’s costs of this application.

5.    Such further or other order as the Court considers appropriate.

41    Ms Loughnan QC, who appeared with Mr Dyrenfurth of counsel on behalf of Mr Nash, filed written submissions dated 12 April 2019, 11 June 2019 and 17 June 2019. In response, Mr Austin QC, who appeared with Ms Mills of counsel on behalf of the liquidators, filed written submissions dated 5 June 2019 and 17 June 2019.

42    As expressed in the first order sought in his application, Mr Nash sought access to the liquidator’s affidavit filed in support of the application for summons for examination. It is convenient to respond to that request after dealing with Mr Nash’s application that Mills Oakley be restrained. For reference, these reasons return to Mr Nash’s request for access to the liquidator’s affidavit below at [129].

43    The contest in this application centred on whether Mills Oakley ought be restrained from acting for, or advising, the liquidators in relation to Mr Nash’s examination. Mr Nash submitted that Mills Oakley has a conflict of interest and ought be restrained. He advanced that contention based on the following three alternative grounds:

(1)    the possible misuse of confidential information by Mills Oakley;

(2)    a breach of the duty of loyalty owed by Mills Oakley to Mr Nash; or

(3)    the perception of conflict contrary to the proper administration of justice.

44    There is no dispute between the parties that the above bases may justify the exercise of the Court’s jurisdiction to restrain solicitors from acting against former clients. Their dispute is in relation to the application of these principles to the facts of this case.

45    In addition to seeking to refute these grounds, the liquidators argued that Mr Nash, as a mere examinee in the public examination, does not have standing in this proceeding to bring an injunction to restrain Mills Oakley from acting for the liquidators. It is logical to deal with this point first.

Standing

46    The liquidators submitted that Mr Nash did not have standing to bring an application for the restrain Mills Oakley from acting for the liquidators in the course of the examination of Mr Nash. In the submission of the liquidators, Mr Nash, as an examinee, was, and is, a mere witness and is not a party to the examination. Mr Nash has not been called by a party to the proceeding, but has been summoned by the Court, on the application of the liquidators, to give evidence only.

47    Mr Austin QC, on behalf of the liquidators, relied primarily upon the decision of Debelle J in Re Westgate Wool Co Pty Ltd (in liq) (2006) 206 FLR 190 (Westgate). In that case, an examinee (who was summonsed to a public examination in relation to the examinable affairs of a company in liquidation) applied to restrain the liquidators’ law firm from acting given that the firm had previously represented a litigant in a Federal Court proceeding against the corporation the subject of the examination.

48    Debelle J refused to grant an injunction on the basis, inter alia, that the examinee did not have standing to seek such relief: Westgate at [50]. There were two apparent reasons for reaching this conclusion. The first reason was that the examinee was not the former client of the law firm, as explained at [53] of his Honour’s reasons:

As it is the former client who has imparted confidential information to the solicitor, it is the former client only who has standing to seek to prevent disclosure of that confidential information. Thus, the only person entitled to apply for an order to restrain [the law firm] from acting for the liquidators is [the former client]. [The examinee] does not, therefore, have any entitlement to apply for an injunction of the kind he seeks. As the question of the propriety of [the law firm] acting for the liquidators on the examination is a matter for [the former client], [the examinee] is seeking to meddle in affairs which are not his own.

49    The conclusion in this passage is clearly distinguishable from the facts of this case and is not a barrier to the standing of Mr Nash. In this case, Mr Nash is the former client of Mills Oakley and is prima facie entitled to seek protection of his confidential information.

50    The second reason of Debelle J for reaching the conclusion that the examinee in Westgate did not have standing was the examinee’s mere role as a witness in the examination, as explained at [54] of his Honour’s reasons:

In addition, [the examinee] has no other role than as a witness. He has been summoned to give evidence and to produce documents. A witness has no standing to litigate the question whether it is proper for a firm of solicitors to be acting in the proceeding in which he has been summoned to give evidence. There is, therefore, no ground upon which [the examinee] is entitled to seek to restrain [the law firm] from acting for the liquidators.

51    The liquidators also relied on the decision of Re Owston Nominees No 2 Pty Ltd (In liq) (recs and mgrs apptd) (2013) 94 ASCR 500 (Owston Nominees), in which Black J referred to Westgate. However, for reasons that will be explained, I do not read his Honour’s remarks as strongly supporting the argument that Mr Nash does not have standing in this case.

52    Black J was faced in Owston Nominees with an application that a liquidator be restrained from engaging a law firm in relation to a summons for examination under ss 596A and 596B of the Corporations Act 2001 (Cth). At [31] of his Honour’s reasons in Owston Nominees, Black J referenced the “the wider view” of Debelle J in Westgate “that an examinee did not have standing to seek an injunction of the kind sought in the proceedings”. Black J then quoted [54] of Westgate, as was extracted above at [50]. Reflecting on that paragraph in Westgate, Black J stated the following at [32]:

I would not understand that observation [of Debelle J at [54] of Westgate] as necessarily preventing an examinee raising issues as to the conduct of a liquidator or his or her legal representatives, both of whom are officers of the court, as warranting the court’s intervention in an appropriate case, as was done in [Re Temple; Southern Hotels Pty Ltd [2000] FCA 1406]. However, that approach seems to me to suggest at least that the court should not intervene, on the application of a third party, so as to require termination of a liquidator’s engagement of legal representatives where a less intrusive course is available.

53    On the facts of Owston Nominees, Black J held at [33] that such a course “less intrusive” than restraining the law firm was available. As such, in that case it was not “necessary or appropriate to express a view that the liquidator cannot continue to retain [the relevant law firm]”.

54    Returning to the broader principles, it is correct that a “relevant person” (within the meaning of s 81(1) of the Act) who is summonsed to attend an examination has no other role than as a witness. The relevant person does not have a right to take part in the examination by putting questions to a witness: Re Jacka; Ex parte Jacka (1986) 12 FCR 44. The relevant person is instead merely a witness of the court: Re Price; Ex parte Commercial Banking Co of Sydney Ltd (No 3) (1948) 14 ABC 137 (Price). However, this alone does not, in my view, address the question of whether such a witness has the requisite “standing” to restrain the liquidators from engaging legal practitioners who are in the possession of confidential information of the witness.

55    The reference in Owston Nominees to a liquidator, and his or her legal representatives, being officers of the court is key. As is well established, the court has an inherent jurisdiction to restrain legal practitioners 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: Kallinicos v Hunt (2005) 64 NSWLR 561 (Kallinicos) at [76] and the authorities cited therein.

56    Due appreciation must also be given to the fact that the body undertaking an examination under s 81 of the Act—either the Court, Registrar or magistrate—will ordinarily be required to undertake a more active approach to the control and management of proceedings than would ordinarily occur in curial proceedings. That is because public examinations of this kind “are not in the nature of legal proceedings before a court; they are more in the nature of investigative procedures where the Court has a presence for the purpose, basically, of seeing fair play between the persons interrogating and the persons being interrogated”: Re Monadelphous Engineering Associates (N.Z.) Ltd. (in liq.); ex parte McDonald and Watson (1989) 7 ACLC 220 at 223 (emphasis added).

57    In light of these matters, I agree with the observation of Black J in Owston Nominees that the fact that an examinee has no role other than as a witness does not mean that the witness cannot raise issues “as to the conduct of a liquidator or his or her legal representatives … as warranting the court’s intervention in an appropriate case”. A public examination is not akin to private inter partes litigation where, as a broad statement, the jurisdiction of the court “is confined to the grant or remedies to litigants whose rights in private law have been infringed or are threatened with infringement”: Gouriet v Union of Post Office Workers [1978] AC 435, 499-500. To ask whether Mr Nash has “standing” in this sense is to distract from the proper inquiry.

58    What qualifies Mr Nash to approach this Court for injunctive relief is not the capacity in which he participates in the examination under the Act. He is rather entitled to seek the injunction on the basis that this Court, as a superior court of law and equity, and also one with inherent jurisdiction, or jurisdiction akin to this, in respect of its officers, has the power to protect against a legal practitioner disclosing confidential information of a former client.

59    Accordingly, where a person is summonsed to appear as a witness in an examination under s 81 of the Act upon the application of one of the persons specified in s 81(1), the witness is entitled to raise with the court issues as to the conduct of the applicant, or his or her legal representatives, in respect of the witness’ examination. Whether the court will intervene depends on the basis for the witness’ concerns and all the circumstances of the case. Where, as in this case, the witness is concerned that the applicant’s legal representatives, being an officer of the court, possesses confidential information of the witness that may be used adversely to his or her interests in the course of his examination, the witness is entitled, on the bases explained above, to apply to the court for an order restraining the legal representatives from acting for, and advising, the applicant in relation to that examination. To the extent that Westgate says otherwise, I respectfully disagree.

60    Mr Nash accordingly has “standing” to bring this interim application. The three bases upon which Mr Nash argues that Mills Oakley should be restrained, as outlined above at [43], are now considered in turn.

First basis for restraint: Possible misuse of confidential information

61    Mr Nash first contends that Mills Oakley should be restrained on the basis of the possible misuse of his confidential information.

The test

62    The court will restrain a legal practitioner from continuing to act for a party if a reasonable person, informed of the relevant facts, might reasonably anticipate a danger of misuse of confidential information of a former client and that there is a real and sensible possibility that the interest of the practitioner in advancing the case might conflict with practitioner’s duty to keep the information confidential, and to refrain from using that information to the detriment of the former client: Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357 (Mallesons) at 362-3; Farrow Mortgage Services Pty Ltd (In liq) v Mandall Properties Pty Ltd [1995] VR 1 at 5; Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 (Bolkiah) at 237; Newman v Phillips Fox (1999) 21 WAR 309 (Newman) at [63]; Sent and Primelife Corporation Ltd v John Fairfax Publication Pty Ltd and Hills [2002] VSC 429 (Sent) at [33].

63    The strictness of this test arises not least because of the special fiduciary position of a legal practitioner towards his or her client: Mallesons at 361; Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307 (Carindale) at 310-11; In re A Firm of Solicitors [1997] Ch 1 (In re A Firm of Solicitors) at 9. Drummond J explained in Carindale at 311 that the reason for the emphasis on the fiduciary character of that relationship was twofold:

First, there is a public element in the work that a solicitor does in that he is an officer of the court and, in performing his professional function, he plays an integral part in the administration of justice. …

Secondly, the existence of legal professional privilege and the policy considerations which justify its continued recognition are inconsistent with a rule that would too readily allow a solicitor, who has received confidential information from one client, to later act for another client against the old client’s interests.

64    This test for restraining a legal practitioner on the basis of the possible misuse of confidential information may be dissected, and then applied, in a number of ways. Based on the relevant authorities, particularly the approach of Riordan J in Babcock & Brown DIF III Global v Babcock & Brown International Pty Ltd [2015] VSC 453 (Babcock) at [70], I will apply the relevant test by responding to the following sequence of questions (which are in short-form for the sake of simplicity):

(a)    What is the relevant information?

(b)    Is that information confidential?

(c)    Does the legal practitioner have possession of that information?

(d)    Is the legal practitioner proposing to act “against” the former client in the requisite sense?

(e)    Is there a real risk that the confidential information will be relevant?

(f)    Is there no real risk of misuse of the confidential information?

65    The applicant—Mr Nash in this case—bears the onus of answering question (a) with sufficient particularity, and also satisfying the court of affirmative answers to questions (b) to (e). However, once the court is satisfied of those matters, the evidential onus shifts to the respondent—the liquidators in this case—to address question (f).

(a) What is the relevant information?

66    For material to possess the character of confidential information, the information in question must be identified with precision: In re A Firm of Solicitors at 10; Carindale at 314, citing Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443; O’Brien v Komesaroff (1982) 150 CLR 310 at 327; Durban Roodepoort Deep, Limited v Mark David Reilly and Glenn Robert Featherby As Administrators of the Deed of Company Arrangement of Laverton Gold NL (Subject to Deed of Company Arrangement) & Ors [2004] WASC 269 (Durban) at [69]-[80]. As explained by Le Miere J in Durban at [80], the precise identification of the information is also central to the subsequent characterisation of its potential misuse:

Before a court will grant an injunction to protect a client's confidential information by restraining his former solicitor from acting against him, the former client must establish that the solicitor possesses confidential information and must identify the confidential information with precision and not merely in global terms. The client must identify the confidential information with some particularity. The degree of particularity required must depend upon the facts of the particular case. The confidential information must be identified with sufficient particularity to enable the court to determine whether the information is truly confidential, whether the confidential information which once existed, if it did, continues to be confidential and whether the confidential information is relevant to any issue in the current proceedings and might be used in those proceedings.

67    The information that Mr Nash suggests is confidential may be summarised under two broad categories of information and a residual standalone document.

68    The first broad category of information is what is known as “getting to know you factors”. This is information that a legal practitioner learns about his or her client through the course of the engagement. It includes information such as the client’s personality, character, honesty, strengths, weaknesses and attitudes to litigation: Yunghanns v Elfic Ltd (formerly known as Elders Finance & Investment Co Ltd) (unreported, Supreme Court of Victoria, Gillard J, 3 July 1998) at 10-11.

69    Mr Nash argues that, as a result of Mills Oakley acting for him and Stellar Finance in both contentious and non-contentious matters over a period of about ten years, Mills Oakley has got to know him extremely well. In particular, Mr Nash deposed to the following:

In acting for me and Stellar Finance in the 6 contentious matters … , my personality, perceived strengths and weaknesses and attitudes to disputes and litigation became well-known to Mills Oakley and the solicitors involved in the matters. Mills Oakley possesses intimate knowledge of that confidential information. I believe that Mills Oakley’s knowledge of my personality, perceived strengths and weaknesses and attitudes could be put to use in not only forming strategy and questioning of me but providing advice to [the liquidators] on matters arising out of my examination.

…

Also, by acting for Stellar Finance in the non-contentious matters, Mills Oakley and the solicitors involved acquired intimate knowledge of me, my business activities and approach and my personality. I believe that Mills Oakley’s knowledge of … [this confidential information] could be put to use in not only forming strategy and questioning of me but providing advice to [the liquidators] on matters arising out of my examination.

70    The second broad category of information is the electronic documents that contain content in relation to the matters in respect of which Mills Oakley acted for Mr Nash. As explained, Mr Lewin deposes in this third affidavit to Mills Oakley continuing to possess the 112 Electronic Files. Hard copies of these files were collectively tendered by Mr Nash as Exhibit N1, Confidential Exhibit N3 and Confidential Exhibit N4.

71    Mr Nash claims confidentiality over one further document that does not fall within these categories, which is the Gateway Spreadsheet. Although it is a single document, it is referred to below for the sake of consistency as the third category of information.

72    These categories of information have been defined with sufficient precision. That much is obvious in relation to Electronic Files and the Gateway Spreadsheet, which together constitute an enumerated set of identifiable documents. Moreover, there is no need to further particularise the “getting to know you factors”. It is sufficient that Mr Nash has identified the individuals that worked on the Previous Matters.

(b) Is the information confidential?

Test of confidentiality

73    The test for whether information is confidential or not is dependent on the source of the duty of confidentiality. At general law, the duty will either arise in contract pursuant to the retainer between the legal practitioner and client, or otherwise pursuant to equitable obligations. However, the difference between these bases often appears to be blurred in practice. The parties did not distinguish between the two in this case.

74    There is no one precise formulation for determining whether information is confidential: Australian Medic-Care Co Ltd v Hamilton Pharmaceutical Pty Ltd (2009) 261 ALR 501 at [634]. However, it is clear that, within the context of a relationship of legal practitioner and client, the concept is not to be construed narrowly.

75    To start, unless a relevant exception applies, all communications by a client to the legal practitioner will prima facie be confidential, as explained by Riordan J in Babcock at [83]:

In my opinion, communications (other than those about matters of common or public knowledge) between a client and a solicitor for the purposes of obtaining or giving legal advice would have the necessary ingredient of confidentiality against all persons unless, by reason of implied direction or otherwise, the solicitor was authorised to provide the confidential communication to the third party.

76    Even broader, Professor Dal Pont quotes a Canadian decision which expresses that “any information received by a lawyer in his professional capacity concerning his client’s affairs is prima facie confidential unless it is already notorious or was received for the purposes of being used publicly or otherwise disclosed in the conduct of the client’s affairs”: Dal Pont G E, Lawyers’ Professional Responsibility (6th ed, Thomson Reuters, 2017) p 345, quoting Ott v Fleishman [1983] 5 WWR 721 at 723. Moreover, although the passing of information from client to legal practitioner is the most obvious means of information attracting a confidential character, it is not necessary for that information to have come directly from the client. The question is not who provided the information, but the character of the circumstances in which the legal practitioner received it: In re Holloway; Young v Holloway (1887) 12 PD 167 at 171.

77    Information received in circumstances of confidence can, however, lose its character as confidential. As expressed by Professor Dal Pont, “[w]hether reflected in the framing of the implied term as to confidentiality or, more perhaps accurately, by reference to the equitable doctrine of confidentiality, the duty of confidentiality lasts as long as the information in question remains outside the public domain”: Dal Pont G E, Law of Confidentiality (LexisNexis Butterworths, 2015) p 170. But once confidential information is characterised as having been released into the “public domain”, it forever loses its character as confidential.

The information in this case

78    Applying these principles, I am satisfied that each category of information raised by Mr Nash retains the requisite character of confidentiality.

79    Information in the nature of the “getting to know you factors” requires a particular approach to the analysis of confidentiality in a document. Although the confidentiality of this information can be established through direct evidence to that effect from the client and the legal practitioners, it may also be inferred from the nature and extent of work undertaken by the legal practitioner for the client: Sent at [69]-[70]. In Sent, Nettle J held at [68]-[70] that “getting to know you factors” were likely to have been disclosed to the client’s counsel in advance of, and during the course of, a conference that ran for about two hours (and one held over a decade prior to the application to restrain counsel). Nettle J expressed at [70] that, “on any analysis”, the disclosure of such information was “highly confidential”. If that limited exposure to the client was sufficient for the information in Sent to be characterised as such, then it is to be expected that the more extensive exposure of Mr Nash to Mills Oakley would result in a similar conclusion.

80    Mr Nash clearly had a close professional relationship with Mills Oakley. As explained, Mills Oakley advised and acted for Mr Nash and/or Stellar Finance in six contentious matters between 2001 and 2009, and numerous non-contentious matters between 2003 and 2006. Even if these matters were finalised over a decade ago, it is a reasonable inference that the solicitors working on those files, and particularly the Partners and senior solicitors, would have built a close understanding of Mr Nash. This includes, in particular, the Partners of Mills Oakley said to have been involved on the contentious matters for Mr Nash and/or Stellar Finance.

81    Notwithstanding the general concern with information being identified in “global terms” (see Carindale at 314), “the nature of legal work itself sometimes is sufficient to establish the nature of the confidential information sought to be protected”: Sent at [69]. In light of the extended professional relationship between Mills Oakley and Mr Nash, I am satisfied that the information gained by some or all of the Continuing Lawyers in respect of Mr Nash, in the form of the “getting to know you factors”, would meet the test of confidentiality.

82    Turning now to the Electronic Files, Mr Austin QC submitted on behalf of the liquidators that correspondence between Mills Oakley, on behalf of Mr Nash, and another solicitor or firm of solicitors would not meet the test of confidentiality. In his submission, this form of communication, and indeed any form of communication by a solicitor to a third party, would not attract the requisite characterisation as confidential. However, that exhaustive proposition cannot be accepted.

83    The law of confidentiality presupposes that the confider has provided the confidant with certain information for a particular and limited purpose. Where the information is disseminated by the confider for a limited and particular purpose, the law of confidentiality is generally flexible enough to permit the confidant to use that information in a manner consistent with that purpose. As expressed by Vickery J in Hodgson v Amcor Ltd (No 4) (2011) 32 VR 568 at [46], “disclosure in certain circumstances, even to a wide circle of persons, may not necessarily give rise to a loss of confidence”. This proposition can only be expressed generally, however, because there is a point at which the relevant purpose would fundamentally erode the confidentiality of the information. By way of an obvious example, if the “confider” expressed to the “confidant” that the purpose of conveying the information was that the confidant should be shared openly without restriction, then that information would by definition not be confidential. In more difficult cases, the confidentiality or publicity of information for these purposes will be a matter of degree. In any event, whether information retains its confidentiality must be determined by reference to the facts in each particular case.

84    I have read copies of each of the Electronic Files. I am satisfied based on the principles set out above that most of these files contained information of a character that is confidential to Mr Nash.

85    Finally, I have also read the Gateway Spreadsheet. Without descending into too greater detail, I am satisfied that the Gateway Spreadsheet is confidential to Mr Nash on the basis that the document contains certain information relevant to the Gateway Dispute about payments of commissions to him.

(c) Is Mills Oakley in possession of the confidential information?

86    For a legal practitioner to be restrained from acting against a former client on this basis, the legal practitioner must be “in possession of” the confidential information in the relevant sense. For physical and electronic documents, this is ordinarily simple to determine. In this case, there is no dispute that Mills Oakley is in possession of copies the Electronic Files and the Gateway Spreadsheet. In particular, I have found above at [24] that Mr Lewin and Ms Carruthers have viewed the Electronic Files. I have also found at [25] that Mr Lewin, Ms Malek, Mr Davidson, Ms Carruthers and Ms Hansani have viewed the Gateway Spreadsheet.

87    Mills Oakley, as a firm, does not, however, have possession of the “get to know you factors”. Unless recorded in written form, that form of information is not capable of communal possession. It is instead knowledge and experience contained within the mind of an individual solicitor. And, importantly, one legal practitioner’s knowledge cannot be imputed to his or her firm, or other solicitors within that firm: Newman at [32]-[36]; Babcock at [60].

88    In this case, it may be accepted that the Continuing Lawyers, as individuals, compiled a degree of understanding about Mr Nash by acting on the Previous Matters. Some may have built an understanding of Mr Nash more than others. It is not possible to identify with precision who knows what about Mr Nash without evidence from each of those Continuing Lawyers. However, for current purposes, it is sufficient that these solicitors had more than trivial interaction with Mr Nash through the course of those matters. Each of these Continuing Lawyers are “in possession of” the “get to know you factors” for current purposes.

(d) Is Mills Oakley proposing to act “against” Mr Nash in the requisite sense?

89    Most applications to restrain a legal practitioner from acting against a former client are made in the context of adversarial litigation. The current circumstances are different. In this case, the alleged threat of misuse of confidential information will not arise through Mills Oakley acting for a party in direct litigious contest with Mr Nash. Indeed, Mr Nash is not a party at all in the proceedings in which the possible misuse would manifest itself. Mr Nash’s involvement is as a “mere” examinee summoned to give evidence under s 81 of the Act.

90    For this purpose, and also the purpose of question (e) to be discussed below, it is necessary to first obtain an appreciation of the subject-matter of the forum in which the confidential information may possibly be used by the legal practitioner. In this case, the relevant forum is a public examination under the Act.

Nature of the public examination

91    Mr Nash was required to attend an examination pursuant to the Summons issued under s 81 of the Act. Subsection (1) of s 81 provides the following:

Where a person (in this section called the relevant person) becomes a bankrupt, the Court or a Registrar may at any time (whether before or after the end of the bankruptcy), on the application of:

(a)     a person (in this section called a creditor) who has or had a debt provable in the bankruptcy;

  (b)     the trustee of the relevant person’s estate; or

  (c)     the Official Receiver;

summon the relevant person, or an examinable person in relation to the relevant person, for examination in relation to the bankruptcy.

92    The balance of s 81 primarily sets out the scope of, and procedures for, such an examination. In relation to what may occur at the examination, the Act states that “the Court, the Registrar or the magistrate may put, or allow to be put, to a person being examined under this section such questions about the relevant person or any of the relevant person’s examinable affairs as the Court, the Registrar of the magistrate, as the case may be, thinks appropriate”: s 81(10) of the Act. A person’s “examinable affairs” is in turn defined by s 5(1) of the Act to mean:

(a)    the person’s dealings, transactions, property and affairs; and

(b)    the financial affairs of an associated entity of the person, in so far as they are, or appear to be, relevant to the person or to any of his or her conduct, dealings, transactions, property and affairs.

93    A person subject to an examination may also be required to produce at the examination certain books that are in the person’s possession and are relevant to matters about which the person is being, or is to be, examined: ss 81(1B), 81(11A) of the Act.

94    These procedures established by the Act are “basically designed to establish what assets the bankrupt had, what has happened to those assets, and whether action should be begun (or continued) to recover them”: Karounos v Official Trustee (1988) 19 FCR 330 at 335; see also Re Csidei; Ex parte Andrew (1979) 28 ALR 381 at 385. In addition, the examination is also “for the purpose of the protection of the public by a full and searching examination to be carried out as to the conduct of the debtor, in order that a full report may be made”: Griffin v Pantzer (2004) 137 FCR 209 (Griffin) at [76]; see also R v Zion [1986] VR 609 (Zion) at 613. See generally Southern Cross Petroleum Sales (SA) Pty Ltd (in liq) v Hirsch (1998) 70 SASR 527 at 534.

95    An examination is commenced ex parte by either a creditor, the trustee of the bankrupt estate or the Official Receiver. The Act provides that these persons may take part in the examination and, for this purpose, may be represented by counsel or a solicitor: s 81(8) of the Act. In this case the liquidators retained Mills Oakley in relation to the examination of Mr Nash.

96    Although the “relevant person” may be legally represented (s 81(7) of the Act), he or she is not a party to the examination. As noted above at [54], the relevant person is instead merely a witness of the court: Price. A person being examined must answer all questions put to him or her (s 81(11) of the Act), subject to the discretion of the Court, Registrar or magistrate, as the case may be, under s 81(10) of the Act to disallow the question.

97    In attending an examination as a witness, a relevant person is not afforded the same protections as a witness in adversarial litigation. A relevant person is not excused from answering a question merely because to do so might tend to incriminate him or her: s 81(11AA) of the Act: in the context of s 77(2)(a) of the Act, see Griffin. In addition, although legal professional privilege has been held to be available to a relevant person (see, for example, Re Wagner; Ex parte Stapleton v Bennett (1964) 20 ABC 133), he or she may not be able to assert the privilege where the communication was “so closely connected with property of the bankrupt which vests in the trustee”: Re Steele; Ex parte Official Trustee of Bankruptcy v Clayton Utz (1994) 48 FCR 236 at 245.

Ability to use confidential information adverse to relevant person

98    Various authorities and commentary contain observations to the effect that a legal practitioner may be enjoined on the basis of a possible misuse of confidential information where the legal practitioner’s new client is to “act against” the former client. That is undoubtedly true but the doctrine extends further. The touchstone of the restraint of a solicitor is not direct opposition to the former client per se, but rather conflict with the legal practitioner’s duty of confidentiality to the client (see Mallesons at 362-3; Sent at [33]), and that such conflict would disadvantage, or operate to the detriment of, the former client (see Carindale at 312-313).

99    As such, there is no merit in a response to the application to restrain Mills Oakley to say that a firm of solicitors acting for the applicant in a public examination are not “acting against” a witness. That is not the relevant inquiry. Within the context of a public examination, the inquiry will centre on the existence of conflict with the firm’s duty of confidentiality to, and any consequent disadvantage or detriment to, the witness.

100    It must be recalled that a public examination under the Act is not convened in a vacuum. The examination “is inquisitorial and investigatory by nature and is designed to lead to further action against the bankrupt should this be seen to be warranted by his answers”: Zion at 614. With this in mind, it is clearly conceivable that a firm of solicitors could misuse confidential information obtained from, or in relation to, a former client—who is now the “relevant person” for the purposes of the examination—by acting for the applicant in such an examination.

101    For these reasons, it is no defence to the application to restrain Mills Oakley that the firm are not acting “against” Mr Nash in the sense commonly understood in adversarial litigation.

(e) Is there a real risk that the confidential information will be relevant?

102    For a legal practitioner to be restrained from acting against a former client on the basis of a possible misuse of confidential information, the “possible misuse” must be sufficiently characterised. There must be a sufficient nexus between the confidential information of the former client and the manner in which it is to be misused by the legal practitioner.

103    The scope of the books that Mr Nash was required to provide at the examination, and the subject-matter of the questioning at the examination, is confined by the concept of “examinable affairs” under the Act. This is a broad concept. As set out above at [92], it encompasses Mr Nash’s “dealings, transactions, property and affairs” and “the financial affairs of an associated entity of [Mr Nash], in so far as they are, or appear to be, relevant to the person or to any of his … conduct, dealings, transactions, property and affairs”.

104    The subject-matter of the books to be produced by Mr Nash at the examination were further defined by the Summons issued to Mr Nash. However, the classes of books specified under the Summons are themselves exceptionally broad and do not narrow the scope of subject-matter much further from that of Mr Nash’s “examinable affairs”. For instance, the Summons required Mr Nash to produce the following the classes of books relating to his examinable affairs:

…

6.     All Documents and Financial Records which evidence or record any funds held by you, or on your behalf, with any Financial Institution during the Period.

…

8.     All Documents and Financial Records which evidence or record the payment of any money to you, or to a person or entity on your behalf, during the period.

9.     All Documents and Financial Records which evidence or record the payment by you, or on your behalf, of any maintenance expenses in relation to any of the Properties.

…

18.    All Agreements entered into during the Period between:

(a)     any of the Related Entities;

(b)     you and any of the Related Entities;

(c)     you and Elizabeth;

(d)     Elizabeth and any of the Related Entities;

(e)     Kenneth and any of the Related Entities; …

…

105    The “Period” for the purposes of the Summons was not brief; it was the “Examination Period” as defined above at [29], being from 1 July 2006 to 19 July 2018. Moreover, the concepts of a “Document”, “Financial Record” and “Agreement” were in turn defined expansively by the Summons.

106    Given the breadth of the definition of “examinable affairs’ under the Act, and the classes of book specified in the Summons, it does not take much to expect that the confidential information typically held by a commercial law firm such as Mills Oakley might be relevant to an examination of one of its former clients as a “relevant person” under s 81 of the Act.

107    Having read the Electronic Files, and in light of the scope of subject-matter of Mr Nash’s examination, I am satisfied that there is a real risk that the content of most of these documents will be relevant to his examination to his disadvantage.

108    Likewise, I am satisfied that there is a real risk that the Gateway Spreadsheet, which contains information in relation to the payment of commissions to Mr Nash, will be relevant to Mr Nash’s examination to his disadvantage.

109    The information in the form of the “getting to know you factors” requires further consideration. On one hand, knowledge such as Mr Nash’s general attitudes to resolving litigation will hold little relevance to a public examination under the Act. In addition, my view is that a court should be careful not to be blindly protective of a former client when it comes to information gained by his or her legal representatives in the form of “getting to know you factors”. It should not occur that, by briefly meeting the client, and learning about a few of his or her personal traits, that the legal representatives will thereafter be precluded from acting for another person in a matter in which the former client happens to be a witness.

110    In this case, however, Mr Nash had an extensive relationship with Mills Oakley in the course of the Previous Matters, as explained above at [80]. The Continuing Lawyers, and in particular those who were more senior solicitors at the time of acting for Mr Nash, would have gained a close understanding of Mr Nash. And matters such as Mr Nash’s personality, character, honesty, and abilities as a witness do hold relevance to the manner in which Mr Nash would be expected to answer questions in the course of his examination. For these reasons, I accept that there is a real risk that the confidential information held by the Continuing Lawyers in the form of the “getting to know you factors” will be relevant to the examination of Mr Nash in a manner that is to his disadvantage.

(f) Is there no real risk of misuse of the confidential information?

111    The authorities express that, after the former client has established that the firm is in possession of information which was imparted in confidence, and the firm is proposing to act for another party with an interest adverse to the former client in a matter in which there is a real risk that the information will be relevant, the evidential burden shifts to the defendant firm to show that there is no real and sensible risk of the misuse of the confidential information: Bolkiah at 237; Babcock at [66], [70(b)]. As the matters above have been established by Mr Nash, the evidential burden now shifts to the liquidators.

112    Babcock involved an application to restrain a law firm and one of its employee solicitors in a proceeding on the basis that the solicitor had worked in matters involving the applicant during the period that she worked at a previous law firm. Riordan J held at [86] of Babcock that any real and sensible risk of a disclosure of confidential information relevant to that proceeding could be avoided by appropriate undertakings. In that case, it was sufficient to avoid any real and sensible risk of the disclosure of confidential information that the Court obtained:

(a)    an undertaking from the solicitor that she would not disclose any confidential information acquired during employment at her previous law firm; and would not in any way be involved in the conduct of the continuing proceeding; and

(b)    an undertaking from her new law firm that it would establish information barriers in accordance with the guidelines adopted by the Law Society of New South Wales for the purposes of protecting the relevant confidential information.

113    In this case, each of the Continuing Lawyers involved in the Previous Matters are prepared to sign undertakings to the effect that they will not discuss, use or otherwise disclose any confidential information to the Examination Lawyers. Additionally, each of the Examination Lawyers are prepared to sign undertakings to the effect that they will not seek to obtain any information whatsoever from the Continuing Lawyers.

114    An immediate problem, however, is that the Examination Lawyers include a number of members of Mills Oakley that have viewed confidential information of Mr Nash. As I found above at [24], Mr Lewin and Ms Carruthers have viewed the Electronic Documents in relation to the relevant Previous Matters in which Mills Oakley acted for Mr Nash. I have found at [25] that Mr Lewin, Ms Malek, Mr Davidson, Ms Carruthers and Ms Hansani have viewed the Gateway Spreadsheet. As such, if Mr Lewin, Ms Malek, Mr Davidson, Ms Carruthers and Ms Hansani are permitted to remain involved in the examination of Mr Nash, the liquidators clearly cannot satisfy this Court that there is not a real risk of misuse of the confidential information of Mr Nash in the course of that examination.

115    For Mills Oakley to continue acting for, and advising, the liquidators in relation to the examination of Mr Nash, there must be an order restraining the liquidators from retaining Mr Lewin, Ms Malek, Mr Davidson, Ms Carruthers and Ms Hansani (Restrained Persons). However, on the basis that I make such an order, I am satisfied that, if:

(a)    the Examination Lawyers other than the Restrained Persons (collectively, Revised Examination Lawyers) provide undertakings substantially in the form proposed the liquidators in Annexure “SAL-67” to Mr Lewin’s first affidavit; and

(b)    Mills Oakley implements an information barrier, in accordance with the LIV’s “Information Barrier Guidelines” adopted on 20 April 2006, for the purpose of safeguarding against the risk of the flow of confidential information of Mr Nash between, on one side, the Continuing Lawyers and the Restrained Persons, on the other side, the Revised Examination Lawyers and any new solicitors, law clerks or other team members at Mills Oakley that become involved in the examination,

then there is not a real and sensible risk of the confidential information of Mr Nash being misused in the course of his examination.

Delay

116    The effect of a delay in bringing the application on the cost, inconvenience and impracticality of requiring a legal practitioner to cease to act is relevant to the Court’s discretion to restrain a solicitor from acting: Kallinicos at [76]; Bowen v Stott [2004] WASC 94 at [58]; Black v Taylor [1993] 3 NZLR 403 at 412; Sent at [60]-[64].

117    If Mr Nash had been successful in establishing that there was a real and sensible risk of Mr Nash being misused by Mills Oakley, as a firm, in the course of his examination, I would have then been required to consider whether Mr Nash’s substantial delay in bringing this application to restrain Mills Oakley, as highlighted above at [39], and the consequent prejudice, financial or otherwise, to the liquidators of restraining their solicitors, would disentitle Mr Nash from an order in his favour.

118    However, given I view the approach above as the only sensible outcome in the circumstances of this case, I do not view as Mr Nash’s delay, and any prejudice to the liquidators, as influencing the orders that I intend to make.

119    Before expressing my final conclusion, however, I will address the other grounds raised by Mr Nash for restraining Mills Oakley.

Second basis for restraint: Duty of loyalty

120    Mr Nash secondly contends that Mills Oakley should be restrained on the basis of a breach of its duty of loyalty owed to Mr Nash.

121    Counsel for Mr Nash submitted that a conflict of interest will arise where the solicitor owes a duty of loyalty. This duty is said to arise where a solicitor intends to or does act against a former client in the same or a related matter. This duty of loyalty is said to continue after the termination of the client engagement: Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501.

122    In response, counsel for the liquidators relied upon the decision of Beach J in Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd (2014) 228 FCR 252 (Dealer) where his Honour rejected an application to restrain a firm of solicitors on the basis that there was no duty of loyalty which survives the termination of a solicitor’s retainer which can be used as the basis for restraining a solicitor from acting against a former client or a client from restraining such a solicitor. His Honour, after a comprehensive analysis of authorities in the Federal and State jurisdictions as well as the English authorities, rejected the concept of a duty of loyalty as providing a basis to disqualify a solicitor from acting against a former client after termination of the solicitor’s retainer: Dealer at [42]-[91]. I respectfully agree with the careful reasoned analysis of his Honour and follow the conclusion that there is no basis for restraining a solicitor arising from a duty of loyalty which survives termination of the solicitor’s retainer.

123    It follows that I will not order that Mills Oakley be restrained from acting for the liquidators on this second basis.

Third basis for restraint: Proper administration of justice

124    The third and final basis for Mr Nash’s contention that Mills Oakley should be restrained arises from the Court’s inherent jurisdiction to ensure the due administration of justice, to protect the integrity of the judicial process and restrain solicitors from acting in a particular case as part of its supervisory jurisdiction: Grimwade v Meagher [1995] 1 VR 446 at 452; Dealer at [37], [93]-[94]. The test to be applied is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that the solicitor be prevented from acting in the interests of the protection of the integrity of the judicial process and the appearance of justice. This basis for disqualification is an “exceptional one” and “to be exercised with appropriate caution”, with due weight to be given “to the public interest in the client not being deprived of the solicitor of its choice”: Dealer at [95].

125    As explained above at [114], I am satisfied that there is a real risk of misuse of confidential information if the Restrained Persons—Mr Lewin, Ms Malek, Mr Davidson, Ms Carruthers and Ms Hansani—are not restrained from continuing to act for, or give advice to, the liquidators for the remainder of the examination of Mr Nash. A fair-minded, reasonably informed member of the public would, in my opinion, conclude that the proper administration of justice would be brought into disrepute if they were not restrained.

126    However, provided the liquidators are restrained from retaining the Restrained Persons to act or advise in relation to the examination of Mr Nash, I am of the opinion that there is no proper basis to restrain the other Examination Lawyers from acting and advising in relation to the examination. That is for the following reasons:

(1)    the solicitors and law clerks previously involved in acting for, and advising, Mr Nash in respect to the Previous Files, and in particular the Continuing Lawyers, have no involvement in the examination of Mr Nash;

(2)    each of the Continuing Lawyers are prepared to give undertakings to the Court not to divulge any information they may have relating to Mr Nash, Kenneth Nash or Stellar Finance;

(3)    none of the Examination Lawyers, other than Mr Lewin, were employed by Mills Oakley during the period Mills Oakley acted for Mr Nash and/or Stellar Finance and/or Kenneth Nash in respect of the Previous Matters;

(4)    the Examination Lawyers were not involved in the Previous Matters;

(5)    the Examination Lawyers (other than the Restrained Persons) will undertake to the Court not to seek to obtain any information from the Continuing Lawyers;

(6)    with the exception of the Restrained Persons, there is no actual conflict of duty with Mills Oakley acting for the liquidators in respect of the examination;

(7)    Mr Nash ceased to utilise the services of Mills Oakley 10 years ago and made his own commercial decision to retain new solicitors to undertake his legal work from time to time;

(8)    to restrain the liquidators from continuing to engage Mills Oakley (other than the Restrained Persons) will cause unnecessary cost and inconvenience: see Dealer at [110]; and

(9)    there has been an inordinate delay in making this application and no proper explanation provided by Mr Nash for the delay. The effect of delaying bringing the application on the cost, inconvenience and impracticality of the Court requiring lawyers to cease to act is relevant to the Court’s discretion to restrain a solicitor from acting: Sent at [60]-[64]; In the matter of IPM Group Pty Ltd [2015] NSWSC 240 at [72] and [73]; Meyfield Developments Pty Ltd v Altus Development Pty Ltd (No. 2) [2018] VSC 25 at [30]-[34].

127    On the basis of the restraint of the Restrained Persons, there is no foundation to suggest that Mills Oakley acting for the liquidators “brings the legal profession and the system which it administers justice into disrepute” in circumstances where Mr Nash did not complain about any alleged conflict for nearly four years after he became aware of the matters said to give rise to the conflict. It is particularly relevant that Mills Oakley has not acted for Mr Nash or Stellar Finance or Kenneth Nash for approximately 10 years, and that there is no evidence that the Examination Lawyers had previously acted for Mr Nash, Stellar Finance.

128    In my view, provided the liquidators are restrained from engaging the Restrained Persons to act for, or advise, the liquidators in respect of in the examination of Mr Nash, then there is no basis to conclude that the proper administration of justice requires that the liquidators be restrained from retaining Mills Oakley as a firm.

Access to the liquidator’s affidavit

129    As introduced above at [42], the first interim order sought by Mr Nash in this application is an order that his legal representatives be granted access to the liquidator’s affidavit filed in support of the application for summons for examination.

130    Although this Court has a discretion to allow an examinee to inspect an affidavit in support of the application for summons, and should be exercised in favour of the examinee where the justice of the case requires, there must be some evidence from which the court may infer that the examinee has an arguable case for setting aside the examination and that the material in the affidavit is relevant to that case: Re Excel Finance Corporation Ltd (Receiver and Manager Appointed); Wortherley v England (1994) 52 FCR 69 (Excel Finance) at 93-94; Re Southern Equities Corporation Ltd (in liq); Bond & Caboche v England (1997) 25 ACSR 394 (Southern Equities) at 422; Roufeil v Fiore, in the matter of the Bankrupt Estate of Peter Andrew Fiore [2019] FCA 687 at [24]-[25]. However, there are also strong reasons why inspection should not be openly granted. This includes where “to do so could afford to an examinee information which could permit the examination process to be frustrated”: Excel Finance at 94.

131    Mr Nash pressed his request for access to the liquidator’s affidavit on the basis of a material breach of the liquidators’ obligation to make full and frank disclosure of all matters which may impact upon the decision to summon a person for examination: see Southern Equities at 422-423; Perazzoli v BankSA, a division of Westpac Banking Corporation Limited [2017] FCAFC 204 at [208]. He submitted that a material non-disclosure may require an order for examination to be set aside: Owston Nominees at [46]-[47], [51], [52], [54].

132    The factual basis for a breach of the liquidators’ obligation was put by Mr Nash in the written submissions as follows:

The [liquidators] and Mills Oakley have not made available to [Mr Nash] or his current solicitors the affidavit/s in support of the application for an examination summons relating to [Mr Nash]. Moreover, they have not informed [Mr Nash] or his current solicitors as to whether or not the said affidavit/s drew attention to the fact that Mills Oakley had extensively advised and acted for [Mr Nash] and Stellar Finance over approximately 10 years, including during the period under investigation pursuant to the examination summons, and the fact that Mills Oakley had previously advised and acted for Kenneth Nash, including receiving the document Instructions to Executors in relation to “repayment of loans to our children or their selected companies or trusts” during the period under investigation pursuant to the examination summons.

133    Having read the liquidator’s affidavit, which is suppressed from Mr Nash and his legal representatives, my view is that my discretion ought be exercised against disclosure of that affidavit to Mr Nash and his legal representatives. Even assuming that the factual matters raised by Mr Nash are “material facts” for current purposes, it is not the case that non-disclosure of such facts will always result in the setting aside of the order for the issue of the summons. As explained by Lander J in Southern Equities at 424, its question of the facts and circumstances of the case:

It cannot be said that an order obtained in circumstances where there has been a failure to disclose material facts must necessarily be set aside. Whether or not the order ought to be set aside for failing to disclose material facts will depend upon the facts not disclosed and the circumstances in which the non disclosure came about. …

On every occasion where there has been a non-disclosure and an order obtained it will be a matter of inquiry as to whether or not that non disclosure should lead to the setting aside of the order.

134    My chief concern is that the liquidator’s affidavit sets out with precision the matters in respect of which the liquidators intend to examine Mr Nash. To release this material to Mr Nash would, in my opinion, materially frustrate the purposes for which the examination is held, even if part of that examination has already been completed.

135    My view is that, if Mr Nash wishes to do so, he is capable of advancing an application to set aside the Summons on the grounds specified above in the absence of access to the liquidator’s affidavit.

Conclusion

136    For these reasons, Mills Oakley may continue to act for, and advise, the liquidators in respect of the examination of Mr Nash, but only on the strict conditions expressed in my orders set out above at pages i-iii. Moreover, Mr Nash will not be granted access to the liquidator’s affidavit.

137    Both Mr Nash and the liquidators have experienced mixed success in this application. Mr Nash was not successful in his application to obtain access to the liquidator’s affidavit, nor his attempt to restrain Mills Oakley as a firm from acting for the liquidators. However, although the ultimate outcome was not his favour, a number of elements of Mr Nash’s application was successful in the face of opposition from the liquidators. Mr Nash was successful in establishing that he had standing to bring the application. He was also successful in establishing that Mills Oakley possessed confidential information of his that was potentially relevant to his examination. The Restrained Persons will be restrained from acting for, and advising, the liquidators in relation to his examination. In light of this mixed success, the parties should bear their own costs of and incidental to the application.

Associate:

Dated:        21 June 2019