ECCLESIASTICAL INSURANCE OFFICE PLC AGAINST LADY IAM HAZEL VIRGINIA WHITEHOUSE-GRANT-CHRIST
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2017] CSIH 33
A2852/00
Lord Bracadale
Lord Malcolm
Lord McGhie
OPINION OF LORD BRACADALE
in the cause
by
ECCLESIASTICAL INSURANCE OFFICE PLC
Pursuers/Respondents
against
LADY IAM HAZEL VIRGINIA WHITEHOUSE-GRANT-CHRIST
Defender/Reclaimer
Pursuers/Respondents: Ellis QC; BLM Law
Defender/Reclaimer: Party
26 May 2017
[1] I am grateful to Lord McGhie, whose opinion I have had the advantage of reading in draft, for fully setting out the background, the submissions of parties and an analysis of the case law. I agree with him that, largely for the reasons given by him, the motion should be refused. As Lord Malcolm has come to a different view I shall briefly state my reasons for refusing the motion.
[2] This case has a long history in the Court of Session. It came before this court on a particular issue which had been raised by the defender and reclaimer at an earlier hearing. This related to whether the solicitors recently instructed by the pursuers and respondents could continue to act for them. In order to understand how this issue arose it is necessary to set out a little of the history of the case. In February 2000 the house of the defender went on fire. She made a claim for indemnity under a policy of insurance with the pursuers. In response, the pursuers raised an action seeking to avoid the policy on the ground that it had been obtained by non-disclosure of material facts and they concluded for its reduction. The summons was served on the defender in October 2000. She consulted Mr George Moore of HBM Sayers. Her dealings with Mr Moore lasted about six weeks; she then instructed other solicitors. In October 2001 defences were allowed to be received late. By March 2002 the defender had become a party litigant, as she has been ever since. On 31 October 2002, on the motion of the defender, the cause was sisted. Nine years later, in March 2012, the sist was recalled on the motion of the defender, who at that stage raised a counterclaim.
[3] On 19 February 2015, after a debate on the procedure roll, the Lord Ordinary (Boyd of Duncansby) found in favour of the pursuers and granted declarator that the pursuers were entitled to avoid the policy on the ground that it had been obtained by non-disclosure of material facts. He dismissed the counterclaim. The defender reclaimed. On 2 March 2016 an Extra Division (Lady Paton, Lord Drummond Young and Lord McGhie) recalled the interlocutor of the Lord Ordinary, allowed a proof before answer, sisted the counterclaim until the conclusion of the substantive case and appointed the case to come out by order before the same bench to hear submissions on a particular issue which might have an impact on proof. The opinion of the court was delivered by Lord McGhie.
[4] The by order hearing was set down to take place on 22 September 2016. On that date the defender, by an oral motion made at the bar, supported by written submissions, raised an issue in respect that the pursuers had recently instructed new solicitors, BLM. The minute of proceedings records that the court, having briefly looked at the submissions of the defender, considered that the defender sought both BLM and senior counsel to withdraw from acting for the pursuers, failing which interdict against them on the ground of conflict of interest. The motion was opposed. The court continued consideration of the motion to a separate hearing. It was this matter that came before this court.
[5] The background to the defender’s motion was that in May 2014, as more fully explained by Lord McGhie, as a result of merger, HBM Sayers became part of BLM, of which Mr Moore became a consultant. The question therefore arose whether BLM could now act for the pursuers in the case, Mr Moore having acted for the defender at an earlier stage.
[6] Shortly before the hearing before this court, the pursuers lodged a minute of abandonment and a minute of admission of partial liability which, if allowed, will have the effect that, when the case returns to the Outer House, the remaining live issues will relate to quantum and the counter-claim.
[7] The extent of the involvement of Mr Moore in the case emerged from various materials lodged by the defender. In 2000, after the summons was served, the defender consulted Mr Moore and he acted for her in the very early stages of the process. She spoke to him on the telephone and on 26 October 2000 by fax sent to him a number of documents, raising some questions with him. On 30 October 2000 Mr Moore wrote to the defender. He acknowledged receipt of the papers. He explained that the next stage would be to arrange a meeting so that he could go over of the papers with the defender, prepare a statement for the purposes of legal aid and complete a legal aid application. He explained that he had agreed to act for her to the extent of providing preliminary advice, entering appearance in connection with the summons, sisting the action and lodging the legal aid application. On 2 November 2000 the defender had a meeting with Mr Moore. On 6 November 2000 Mr Moore wrote to the defender referring to their recent meeting. He enclosed the statement that he had prepared and advised the defender that he was preparing the legal aid papers.
[8] On 9 November 2000 the summons called. The defender entered appearance and on 15 November 2000 the cause was sisted on the unopposed motion of the defender in order to allow her to apply for legal aid. It appears that these two steps were taken by the defender herself rather than Mr Moore. It is not clear whether any application for legal aid was made. In a letter dated 6 December 2000 Mr Moore explained to the defender the basis of the pursuers' case against her. In the course of the following week the defender parted company with Mr Moore and instructed new solicitors. It appears that she was represented by these solicitors until March 2002. After trying unsuccessfully to instruct other solicitors, she again approached Mr Moore. By letter dated 20 March 2002, Mr Moore indicated that he was not prepared to re-involve himself in the case. In these circumstances on 22 March 2002 when the case next called the defender appeared on her own behalf and has continued to do so ever since. As already noted, on 31 October 2002 the case was again sisted and remained so until March 2012.
[9] At the hearing before this court both the pursuers and the defender presented arguments as to whether a solicitor can act against a former client based on disclosure of relevant confidential information, relying on the decision of the House of Lords in Bolkiah v KPMG [1999] 2 AC 222 and related cases. While the case was at avizandum, the court noted the wider jurisprudence of other jurisdictions, including Australia, New Zealand and Canada as well as the United States of America. As a result, we invited further written submissions from the parties and both the pursuers and the defender made written submissions in response.
[10] It is clear from the authorities that in a free society there is a legitimate public interest in the freedom of a person to instruct a solicitor of his or her choosing and for a solicitor to obtain instructions from any member of the public. There is also a public interest in the protection of a person who has instructed, and placed trust in, a solicitor. These interests may in certain circumstances be the subject of friction, particularly where the issue involves a solicitor “changing sides”. I agree with Lord McGhie that confidentiality emerges as the dominant consideration. The test is set out by Lord Millett in Bolkiah at p 235D-E:
“Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which his confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one”:
This is described in the cases as “relevant confidential information”. While BLM assert that they are not in possession of any confidential material, there is no suggestion of a Chinese wall being in place, and the question arises whether Mr Moore is in possession of any relevant confidential information which might be imparted to the solicitor or team of solicitors in BLM acting for the pursuers. I am satisfied that he is not. The defender herself placed before the court a substantial amount of material relating to her instruction of Mr Moore. That material was made available by her to the pursuers and their agents. As more fully explained by Lord McGhie, Mr Moore’s initial role was a limited one and there is no reason to think that he had any involvement in matters relating to quantum. I agree with Lord McGhie that it is not possible to identify by inference any further material which the defender might have been expected to have provided to Mr Moore in the expectation of it remaining confidential. In the end of the day, the defender relied on the document which she was permitted to lodge in a sealed envelope. I agree with Lord McGhie that it adds nothing of significance to material already set out in the pleadings and that neither the material already placed before the court, nor the precognition in the sealed envelope, raise any risk that information imparted in confidence by the defender to Mr Moore may be used to her disadvantage. With the greatest of respect, I am unable to share Lord Malcolm’s concern as to risk in relation to confidential material.
[11] It is common ground that the court has an inherent power supervise its officers and take action where appropriate. In Hepburn v Royal Alexandria Hospital NHS Trust 2011 SC 20 Lord Reed at paragraph [47] described the general inherent power thus:
“…the court possesses an inherent power to do whatever is necessary in order for it to maintain its character as a court of justice. This power is described as ‘inherent’ because it is essential to the court's performance of its constitutional function.”
In the context of the conduct of a solicitor, I agree with Lord Malcolm’s formulation of the test for the court to exercise the power, under reference to Kallinicos v Hunt [2005] NSWSC 1181: whether a fair-minded person would conclude that the solicitor should be prevented from acting, “all in the interests of the integrity of the judicial process and the due administration of justice, including the appearance of justice”. Applying that test to the whole circumstances of the present case, I am unable to agree that this is a case where it is necessary for the court to intervene. The involvement of Mr Moore was limited and at a very early stage of what has turned out to be a very lengthy process. At that stage, the question was whether there had been non-disclosure of material facts; the question of quantum was not in issue. The counterclaim was introduced by the defender about twelve years after her dealings with Mr Moore. It seems likely that when the case returns to the Outer House the live issues will be the question of quantum and the counterclaim. Mr Moore’s involvement with BLM is as a consultant carrying out occasional work. He has no involvement with the defender’s case. In my view, the circumstances of this case are far removed from the circumstances in Spincode Pty Ltd v Look Software Ltd & Ors [2001] VSCA 248, in which the conduct of the solicitor could properly be described as outrageous.
[12] The court in Bolkiah made it clear that in English law there is no continuing legally enforceable obligation of loyalty on the part of a solicitor to a former client (Lord Millett at p 235C-D). Even if such an obligation were a consideration, as suggested by Brooking JA in Spincode, it is difficult to identify any basis for continuing loyalty on the part of BLM. As Lord McGhie points out, any such loyalty would lie with Mr Moore. As to whether there is any scope in the Scottish context for the application of the concept of loyalty to a former client I would reserve my position. I am satisfied that it does not arise in this case and I should prefer to wait until it was focussed in a more suitable case. That said, I consider that there is much force in the analysis of Lord McGhie.
[13] For these reasons, I agree with Lord McGhie that the motion should be refused and that the case now requires to return to the by order hearing before the Extra Division which decided the reclaiming motion.
[14] Finally, I do share the concerns expressed by all the judges who have considered the defender’s motion. On any view, this is an area in which great care must be taken by solicitors, particularly in the era of mergers of firms of solicitors. I note Lord Malcolm’s observation that the professional bodies may wish to reflect on their codes of conduct.
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2017] CSIH 33
A2852/00
Lord Bracadale
Lord Malcolm
Lord McGhie
OPINION OF LORD MALCOLM
in the cause
by
ECCLESIASTICAL INSURANCE OFFICE PLC
Pursuers and Respondents
against
LADY IAM HAZEL VIRGINIA WHITEHOUSE‑GRANT‑CHRIST
Defender and Reclaimer
Pursuers and Respondents: Ellis QC; BLM Law
Defender and Reclaimer: Party
26 May 2017
[15] The question posed in this application is as follows – can a firm of solicitors act for a party in a litigation, and then, that retainer having ended, at a subsequent stage accept instructions from the former client’s opponent in the same proceedings? All the judges who have had any involvement have entertained immediate concerns. Intuitively, it seems wrong. While not excluding the exceptional case, for my part I am of the view that it would be a sound general rule if a firm of solicitors, having acted on one side of a litigation, was disabled from thereafter changing sides. I would apply such a rule to the present case.
[16] It is striking how much high level relevant and recent (and contradictory) case law there is in various jurisdictions. A great deal could be said on the subject. (The standard textbook on conflicts of interest, first published in 2000, is already in its fifth edition, and devotes several chapters to the circumstances in which a solicitor can be stopped from acting.) However, since I am in a minority as to the proper outcome, I will content myself with the following observations.
[17] I start from the position that this court has an inherent jurisdiction to supervise its officers and, when necessary, regulate their conduct. I am content to adopt the test mentioned in the Australian case of Kallinicos v Hunt [2005] NSWSC 1181 at paragraph 76, which asks – would a fair‑minded person conclude that the lawyer should be prevented from acting, all in the interests of the integrity of the judicial process and the due administration of justice, including the appearance of justice? (A similar approach was adopted in the New Zealand case of Black v Taylor [1993] 3 NZLR 403(CA).) Nothing said by Lord Millett in HRH Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 could remove that power from the Scottish courts; nor do I believe that there was any such intention, not even in respect of the courts of England and Wales. Bolkiah concerned accountants, and it is understandable that their Lordships did not focus on matters particular to lawyers.
[18] In many of the cases judges have grappled with the competing interests of, on one side, duties of confidentiality and loyalty, and the proper administration of justice, and, on the other side, a person’s freedom to choose his lawyer and a lawyer’s ability to pursue his or her career. Concerns have been expressed that an overly strict approach will cause problems, especially in an era of specialisation and fewer but larger firms. All of these are weighty matters, and some decisions suggest a case by case approach, with the emphasis on prevention of the disclosure of confidential information. A fact sensitive approach can and does cause practical problems in terms of resolving disputes while also preserving confidentiality; and in respect of inquiring into a solicitor’s actual knowledge and conduct. (The problems can be exacerbated when the complaining party is unrepresented, and might, in presenting her case, in effect disclose the material in which confidentiality is claimed.) Judges have cited such factors when favouring a more general rule.
[19] Sometimes the context is a desire to act against a former client in a separate though related matter. The present is a case not just of the same matter, but of a firm changing sides during the same litigation. I am influenced by my view that a fair‑minded onlooker would be troubled by what is proposed by the pursuers. That view is in turn influenced by the fact that I am troubled by it. It is clear that the defender herself is far from content. For my part I would expect any litigant to be unhappy if a firm of solicitors who had formerly acted for them, at a later stage of the same proceedings advised and represented the other side; and this no matter that a court was persuaded that there was no real risk of a disclosure of confidential information. In such circumstances, no amount of assurances or undertakings are likely to satisfy the former client, who might well, especially if ultimately unsuccessful, harbour suspicions and a grievance, and form a poor impression as to the fairness and integrity of the judicial and regulatory processes. I would expect the hypothesised onlooker to understand all of this.
[20] An appearance of conflict can be almost as damaging as any proven impropriety. This is sometimes described as “the perception problem”. The contrary proposition is that, if it can be demonstrated that these concerns are more apparent than real, there is a countervailing interest which should hold sway, namely the ability to instruct the solicitor of your choice and freedom for solicitors to pursue their profession, subject only to justifiable restrictions. The courts of England and Wales have reached what has been described as a compromise solution, albeit the duty not to disclose confidential information obtained while advising someone remains absolute. The compromise is that the court will not interfere if it is satisfied that there is no real risk that such information will come into the possession of the person or persons acting for the other party. An injunction was granted in Bolkiah because their Lordships were not so satisfied (see Lord Millett at 239H). It can be noted that the court is concerned not only with the risk of disclosure, but also with misuse of confidential information. The former client is entitled to prevent his former solicitors from exposing him to any avoidable risks, “however slight”, that information which has been imparted in confidence in the course of the fiduciary relationship may come into the possession of a third party and be used to his disadvantage (Lord Millett in Bolkiah at 236F - G). The case for a strict approach in this regard is described as “unanswerable”.
[21] In the present case it is accepted that the pursuers’ solicitors are in possession of information conveyed by the defender to Mr Moore in the context of a solicitor/client relationship. The question now is not whether the pursuers’ current solicitors can be trusted to protect the secrecy of the information they hold. (In any event there would be a conflict with their duty to the current client.) And if information remains confidential, it is not relevant to embark upon an assessment of its ongoing materiality or importance, nor notions of prejudice or no prejudice. Rather, applying the approach laid down in Bolkiah, it would be for the pursuers or their current solicitors to demonstrate that the information gained by Mr Moore when acting for the defender, if and in so far as it was confidential, is no longer confidential, presumably on the basis that it has been disclosed through the pleadings or in some other way. There has been no mention of any barriers against further communication of information from Mr Moore, perhaps on the assumption that he has none. In any event the general trend is that such barriers will not survive scrutiny unless established at the outset.
[22] Returning to the earlier theme, I recognise that concerns have been expressed that the inherent supervisory jurisdiction lacks definite criteria, or, as it is sometimes put, is unprincipled. There are worries that it might “get out of hand” and cause practical problems in the grip of overly strict judges. However, to my mind the key factor in the present case is that it concerns a firm of solicitors changing sides in the course of one and the same litigation. A strict approach in such circumstances will not cause any material threat to the freedoms which have weighed against judicial interference. It was not suggested that anyone would suffer any real prejudice if the pursuers required to instruct other agents.
[23] The court has been assisted by the wider submissions and authorities lodged in response to its request. For myself I have been particularly impressed by the analysis and reasoning offered by Brooking JA in Spincode Pty Ltd v Look Software Ltd & Ors [2001] VSCA 248. I agree with Hollander and Salzedo that his judgment makes “compelling reading” (Conflicts of Interest, 5th ed. 5-005). The learned judge said:
“There is a good deal of authority for the view that a solicitor, as an officer of the court, may be prevented from acting against a former client even though a likelihood of danger of misuse of confidential information is not shown.” (paragraph 38)
It is clear that Brooking JA was not persuaded that misuse of confidential information is the only basis upon which, as he put it, “successive adverse representation” will be checked. While this part of his judgment was not necessary for the court’s decision, I find much of his analysis persuasive. He based his views on (i) the danger of misuse of confidential information; (ii) a breach of a fiduciary’s duty of loyalty; and (iii) restraining solicitors as officers of the court. This opinion emphasises the third aspect. I see no pressing need to couch matters in terms of a common law obligation upon the solicitors arising from the former relationship. That said, in a less legalistic manner, I would expect the fair‑minded member of the public to have sympathy with the former client faced with what could reasonably be described as an act of disloyalty, and to be concerned at the tarnish on the integrity and reputation of the judicial process.
[24] The citation of authority, on either side of the argument, could become lengthy. I will add only a reference to MacDonald Estate v Martin [1990] 77 DLR (4th) 249, a decision of the Supreme Court of Canada. The majority (four justices) refused permission to act on Bolkiah type confidentiality grounds. Three justices (Wilson, L’Hereux‑Dubé and Cory JJ) stressed that the integrity of the judicial system must be the predominant consideration. “The judicial system and the confidence of the public in its operation are too important to be put at risk by any appearance of unfairness” (Cory J at 275). Clearly this is a subject which provokes divisions of view at the highest level.
[25] As to a present danger of misuse of confidential information, I am not persuaded that this can be wholly discounted. The pursuers do not claim that there has been no disclosure to their current lawyers, but rather that the defender has no good reason for alarm. Bolkiah disapproved of balancing exercises and adopted a relatively strict approach. In short, once the solicitors are in receipt of confidential information, or cannot guarantee that they will not receive it, they should not act for a party with an adverse interest to the firm’s former client. No doubt it is tempting to rely upon the somewhat semi‑detached position of Mr Moore, the long time gap since he acted, and the now more limited scope of the proceedings; but it will nearly always be possible to highlight and rely on special features of the particular case. For my part, I am not satisfied that the court can safely assume that all the information conveyed to Mr Moore was not, or is no longer, confidential.
[26] As one would expect, BLM consulted an officer of the Law Society of Scotland; however it was explained to the court that the situation was conveyed in only general terms, which did not advise that the issue arose in the context of one and the same litigation. Given the inspecific information, it is unsurprising that no clear advice was tendered to BLM. Whatever else this case may prompt the professional bodies to reflect on their codes of conduct. For a model which is consistent with a relatively strict approach, they need look no further than the rules of the American Bar Association.
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2017] CSIH 33
A2852/00
Lord Bracadale
Lord Malcolm
Lord McGhie
OPINION OF LORD MCGHIE
in the cause
by
ECCLESIASTICAL INSURANCE OFFICE PLC
Pursuers/Respondents
against
LADY IAM HAZEL VIRGINIA WHITEHOUSE-GRANT-CHRIST
Defender/Reclaimer
Pursuers/Respondents: Ellis QC; BLM Law
Defender/Reclaimer: Party
26 May 2017
[27] Following a fire on 13 February 2000 the defender made a claim for indemnity under a policy of insurance with the pursuers. Later that year the pursuers raised an action for reduction of the policy on the ground of non-disclosure. The defender consulted George Moore, solicitor, now QC, then a partner in HBM Sayers. The pursuers were originally represented by Messrs Simpson and Marwick but following the hearing of a reclaiming motion in 2016 they changed solicitors to BLM. The defender realised that the firm of HBM Sayers had been amalgamated with BLM. Mr Moore was still acting as a consultant. The defender argued that this meant that the firm of BLM could not act for the pursuers. Various consequences were said to flow from this.
[28] The situation of a solicitor acting for one party in a litigation and then changing sides to act for the other seemed to be clearly something to be avoided and it was a matter of some surprise to learn that BLM had been aware of the problem and consciously taken the risk of agreeing to act in this case. However, counsel submitted that the matter was governed by clear English authority and the court decided that the issue required further consideration. Accordingly, by interlocutor of 22 September 2016 the issue of potential “conflict of interest” was put out for consideration at a separate hearing. We heard debate on 4 November. At the outset we made it clear to parties that the matter for discussion was limited to the issue of whether there was conflict of interest although that would be taken in its widest sense. If we found that there was any reason why BLM could not act for the pursuers in the action the consequences of this would be considered at a further hearing.
Relevant Facts.
[29] The following narrative is taken from various productions lodged by the defender as No 103 of process and was not disputed by the parties.
[30] When the Summons was served on the defender she instructed Mr George Moore who was then a partner in HBM Sayers. He expressly said that he agreed to act to the extent of providing preliminary advices, entering appearance, sisting the action and applying for legal aid. If the legal aid application was unsuccessful he would not continue to act. He subsequently met the defender and took a statement from her for legal aid purposes. When the summons called it was sisted by the defender, acting on her own behalf, to allow her to apply for legal aid. Mr Moore and his firm were not involved in the court process. By letter of 6 December 2000 Mr Moore wrote to the defender explaining the main points of the pursuers’ case and giving his views on the issues raised and her prospects of success. It is plain that after that letter the defender was aware that he no longer regarded himself as acting and she advised Messrs Simpson and Marwick that any communication with him should cease. It is not suggested that any information was given to him after that letter. For completeness it may be noted that it appears that in March 2001 the defender was represented by another firm of solicitors in connection with an opposed motion for recall of her sist. But nothing is said to turn on that. Mr Moore was again approached by the defender in March 2002 but, while he gave some advice as to other sources of legal advice and assistance, his firm declined to act.
[31] The pursuers were initially represented by Messrs Simpson and Marwick. That firm subsequently amalgamated with Clyde and Co but continued to act for the pursuers until sometime after the hearing of the reclaiming motion. However, the pursuers had a long standing connection with BLM and in about June 2016 the pursuers changed agent. Since that time BLM have purported to act for the pursuers in the present action.
[32] In May 2014 the firm of HBM Sayers combined with that of Berrymans Lace Mawer and became part of BLM. The new firm had 170 partners, 630 lawyers and associate lawyers and technical experts and 1,550 employees spread across 12 offices across England, Ireland Scotland and Wales. It is a matter of common knowledge that there has been widespread practice of amalgamation of solicitors firms. Since the removal of the cap on the number of partners in a firm and the institution of private limited partnership, firms have grown greatly in size.
[33] Mr Moore has been engaged as a part-time consultant on a self-employed basis with BLM since at least June 2016. The firm BLM was aware of the potential problem in connection with this case before they agreed to take it over. They discussed the matter in very general terms with an official of the Law Society of Scotland. They were told that issues of conflict depended on specific circumstances. They took advice from senior counsel as to the propriety of accepting instructions in the present case. He gave advice to the effect that there was no legal bar on doing so. It is not clear whether counsel was asked to advise on the practical sense of doing so. The court was not told what part the pursuers, themselves, played in these discussions. However, it was understood that they ultimately relied on the advice of senior counsel.
Submissions
[34] Both parties had lodged written submissions and bundles of authorities. The defender’s initial submission, part of a bundle No 103, had been before the court at the hearing on 22 September. The pursuers lodged a response. In course of the hearing on 4 November, the defender lodged a written submission, headed Preliminary Issue. It has been necessary to consider all this material but the essential issues will appear from the discussion below and it is sufficient to set out the parties’ contentions quite shortly at this stage.
[35] Mr Ellis made it clear that he was in court to represent the pursuers. He was not acting on behalf of BLM, although they were in court as instructing solicitors. He pointed out that there was no direct conflict of interest as Mr Moore was no longer acting for the defender. He contended that we should follow the decision of the House of Lords in Bolkiah v KPMG [1999] 2 AC 222; that the real question was one of confidentiality; and that it was only if there was a realistic risk of confidential information in the hands of Mr Moore being used to benefit the pursuers in the litigation that any difficulty might arise. He contended that it was for the defender to show what type of information Mr Moore might hold which might be used to the prejudice of the defender. It was accepted that if she could show a possibility of such risk, it was for him to demonstrate that the risk was remote and unrealistic.
[36] The pursuers submitted that in this case there could be no risk because the issues upon which the defender consulted Mr Moore had become public in the sense of being disclosed to the pursuers in the pleadings or productions. That had been the assumed purpose of disclosing them to Mr Moore in the first place and it was unlikely that there would be any confidential information in the circumstances. There was no issue in dispute which was likely to turn on anything said to Mr Moore which had not been said in the pleadings. Mr Ellis referred to the minute of abandonment saying that the only issue now was one of quantum. But, in any event, even looking at the pleadings as they currently stood there was no realistic likelihood of anything confidential remaining in the hands of Mr Moore or BLM which could have any bearing on the action. Although Mr Ellis did not attempt to rely on any “Chinese wall”, or information barrier, he pointed out that Mr Moore was not an active partner. He had retired from the business though he did some part-time work for them. There was no risk of casual or accidental disclosure. BLM were responsible solicitors and had given an assurance that the few documents still held by them contained nothing of any relevance.
[37] At the hearing before us and in her written submissions at that stage, the defender stressed that her concern was about disclosure of confidential information. She referred to some material dealing with professional practice and also made reference to material dealing with the statutory protection of data. The only case authority she looked at in relation to the problem of apparent change of sides by a solicitor was Bolkiah. The focus of her concern at that stage appeared to be found in her submissions at paragraphs 6 to 13 of her Preliminary Issue where she dealt with some issues of confidentiality and, under reference to Bolkiah, asserted that there was a real risk of unlawful disclosure and unlawful use by BLM of “private sensitive privileged and relevant confidential information”. She was allowed to lodge a sealed envelope containing copies of documents said to be in the hands of Mr Moore which, she said, were both confidential and relevant to issues still to be determined including issues of quantum.
[38] After hearing the initial submissions we took the case to avizandum. Although grateful for the submissions made by the parties, both had their main focus on the decision in Bolkiah. We were aware of the existence of a substantial body of relevant case law in other jurisdictions, including Canada, Australia, New Zealand and the USA dealing with the broad issue of a solicitor changing sides. We eventually came to the view that this was a matter which merited further consideration and that it would be helpful to hear submissions on that case law. We accordingly invited written submissions in a Note of 5 February 2017.
Both parties lodged full and helpful submissions. I have read them with interest and am grateful for the assistance they have provided in informing my own understanding of the issues involved. It is unnecessary for present purposes to restate the submissions in any detail but, to give some indication of the ground covered, I note the various authorities to which reference was made.
[39] The submission for the pursuers made reference to Paterson and Ritchie 2nd edition; Hollander & Salzedo – Conflict of Interest, now in its 5th edition. The former included discussion of two cases before the Scottish Solicitors’ Discipline Tribunal but also referred to Canadian authority which made the point out that regulation by a professional body raised issues which were not necessarily the same as those facing a court: Canadian National Railway Company v McKercher 2013 SCC 39 at [15] to [17].
[40] Mr Ellis discussed the two Outer House decisions in the case Connolly and Connolly v Brown. Bolkiah had not been cited but they did refer to English authority in terms which suggested that that case would have been treated as authoritative. In relation to the wider jurisprudence it was said that, with the exception of the State of Victoria in Australia and the USA, all common law jurisdictions applied the analysis in Bolkiah or something similar on the critical issue of the continuing duty of a lawyer to a former client. These jurisdictions had not recognised a separate continuing duty of loyalty. The critical issue had been recognised to be protection of confidential material. He submitted that the court in the Australian Victoria case of Spincode v Look Software [2001] VSCA 248 had not given proper consideration to the adverse consequences of the ban it envisaged. He accepted that the present court had an inherent jurisdiction to control the administration of justice to ensure that justice was achieved. But that did not allow an unfettered exercise of its discretion. It could be done consistent with the Bolkiah approach. Counsel looked at the Australian cases Borgese v Cater& Blummer [2017] NSWSC 92; Belan v Casey [2002] NSWSC 58; Pradghan v Eastside Day Surgery Pty Ltd [1999] SASC 256.
[41] Canadian jurisprudence appeared to have accepted the Bolkiah approach. This was explicit in Carlinwood Motors v Nissan [2001] OJ 236 and the same approach could be seen in earlier decisions: eg Drabinsky v KPMG [1999] OJ No 1416 (Div Ct). He referred to the need to balance competing interests: MJT v WAT 2002 SKQB 306 and MacDonald Estate v Martin [1990] 3 SCR 1235. The issue was one of protection of confidentiality. It did not turn on any idea of a continuing duty of loyalty.
[42] The same was true of New Zealand where the court had confirmed the proposition that the “rationale behind intervention must lie, not in some perception of disloyalty or impropriety, but in principle – namely the reasonable protection of confidential information”: Black v Taylor [1993] 3 NZLR 403 (CA). He referred to the High Court decisions in Raats v Gascoigne Wicks CIV 2006-406-1; Russell Mc Veagh [1998] 3 NZLR 641; Orlov v National Standards Committee [2014] NZCA 242; Mike Pero Mortgages v Mike Pero [2014] NZHC 2798. In Orlov there was some discussion of the inherent power of the court to prevent a particular lawyer acting but it was accepted that this required something extraordinary, the threshold for removal was high.
[43] The pursuers’ submission did not attempt to explore the jurisprudence of the USA. It was said that there was a multiplicity of states with different jurisprudence. The experience of the USA had been put to court in Bolkiah and rejected. Counsel concluded by a short summary supporting the reasoning in the Bolkiah case. A blanket ban would plainly be too wide. There were legitimate competing interests to be accommodated. Bolkiah reflected a principal that denying representation to the successor client was only justified so far as necessary to protect the interests of the former client. The inherent power of the court to prevent injustice had to be exercised on a proper basis: Hepburn v Royal Alexandra Hospital 2011 SC 20. The basis for intervention was protection of misuse of confidential information not a continuing duty of loyalty. The protection was, he said, necessary only when the information was capable of being used against the client in some tangible manner: Canadian Nation Railway, supra at [54].
[44] The defender’s submission was wide ranging in scope and I limit myself to the material relating to the issue before this present court: the material bearing on “conflict of interest” in the context of solicitors changing sides. Disputes on a variety of other matters will remain to be considered in light of our decision.
[45] Lady Christ stressed the need for the court to give full consideration to her previous written submissions on the matter, in the folder No 103 of process, and I have had that material in mind as well as the material in the document headed “Preliminary Issue” prepared for the hearing in November 2016 and the “Supplementary Submission” of 10 March 2017. The defender’s submissions provide careful analysis of a number of authorities but it is fair to say that she does not appear to challenge the status of Bolkiah as the leading case. Her substantive submissions under reference to the facts of the present case are based on dicta in that case.
[46] Cases considered by the defender include Spincode Pty Ltd v Sorftware Pty Ltd supra; Hilton v Barker Booth and Eastwood [2005] UKHL 8; Cleland v Morrison (1878) 6R 156; Marks and Spencer Group Plc v Freshfields Bruckhaus Deringer [2004] EWCA Civ 741; Connolly and Connolly v Brown, supra; Clark Boyce v Mouat [1994] 1 AC 428 at 435. She cited several cases from Victoria including Pinnacle Living Pty Ltd v Elusive Image Pty Ltd [2006] VSC 202; Sent & Primelife Corporation Ltd v John Fairfax Publication Pty Ltd and Hills [2002] VSC 429 at [98] – [104] and Adam 12 Holdings Pty Ltd v Eat & Drink Holdings Pty Ltd [2006] VSC 152 at [25] and [35] – [37] and McVeigh v Linen House Pty Ltd [1999] 3 VR 394 at [23]. These supported not only the protection of confidential information but also a duty of loyalty and an over-riding jurisdiction to intervene to protect the due administration of justice. In Connolly and Connolly v Brown, Lord Johnston had held that it was part of the law of agency that the duty of trust and confidence owed by solicitors to their client could extend after the termination of their relationship.
[47] Reference was made to the Law Society of Scotland Guidance Rule B2.1. and to Professional Conduct for Scottish Solicitors, by Jane Ryder, on the issue of disclosure of confidential material. There were similar observations in the CCBE Code of Conduct for European Lawyers. The defender concluded her careful examination of legal authority in the United Kingdom by saying: “It follows that the question for the Court is whether LADY CHRIST’s former solicitors BLM has shown that there was no risk of disclosure of LADY CHRIST’s” private, sensitive, privilege and confidential information” comprising “personal date” aforesaid to their current client … and representative Nick Ellis QC.”
Discussion
[48] As is clear from the Note of 5 February 2017 and the procedure adopted to date, the court had a concern about the adequacy of the Bolkiah approach in relation to all the potential issues arising in the case of what may be described in broad terms as a solicitor changing sides. We were aware that the matter had been examined in a variety of other jurisdictions and wished to consider whether it was appropriate for Scottish courts to accept an approach based entirely on protection of confidentiality or whether there were wider issues to consider. In summary I am satisfied that the protection of confidentiality is accepted as the dominant issue in most, if not all, jurisdictions and the main addition factors which have been examined can be characterised as those said to arise either from a continuing duty of loyalty or from the need for the court to intervene when necessary to protect public faith in the proper administration of justice. I have come to accept that there is no continuing obligation of loyalty in the present case and indeed that, unless there are special circumstances, there is no such duty on termination of a normal agency. Although I have come to the conclusion that dicta in Bolkiah need not be read as excluding consideration of the need to preserve public faith in the proper administration of justice, I do not think the circumstances of the present case call for intervention on that basis.
[49] The pursuers did not dispute that the power of the court to protect the interests of justice might require to be invoked in some circumstances. That appears to be consistent with the approach taken by the courts in Australia, New Zealand and Canada. The defender did not make any express submission that such a consideration was an important factor in the present case. She did make reference to a duty of continuing trust but the main thrust of her submission was related to the need to protect confidentiality and, in particular, to the risk of misuse of the material in the sealed envelope. The court concluded that we should examine that material and, having done so, I am satisfied that it contains nothing material going beyond what has already been disclosed and I am also satisfied that there is nothing in it which could be used to the prejudice of the defender.
[50] There is no doubt that decisions of the House of Lords in English cases have always been regarded as of high importance in our jurisdiction and I have given careful consideration to the detail of the Bolkiah case. I have regarded the other material as informative. The wealth of material from England and from Australia, New Zealand and Canada has provided insights into many of the factors to be taken into account and that against the background of a wide variety of factual situations. It is unnecessary and inappropriate in the present circumstance to embark on any detailed examination of the jurisprudence. I am quite satisfied that the real issue in the present case is one of protection of confidentiality. It was not disputed that we should follow the dicta in Bolkiah on that point. The defender did not base her submissions on any fundamental power of the court. I return to the power to intervene where necessary in the interests of justice. But think it appropriate first to deal with the question of a continuing duty of loyalty.
[51] It may be said at the outset that I understand the American courts to have a fairly strict approach to solicitors changing sides and that this may be based on some concept of continuing loyalty. We were not directed to the detail of material from America. The commentary in Hollander and Salzedo: 1-014 appears to be largely based on the terms of the ABA Model Rules of Professional Conduct. The rules assume a duty of loyalty and establish a clear prohibition on an individual solicitor simply changing sides and acting against a previous client. But they seem a little more nuanced when the solicitor is not directly involved in the continuing litigation and when it is his or her role within a firm which has to be considered. I also accept that, as was said by the Supreme Court of Canada in the Canadian National Railway Co case, there is a difference between duties which may have to be enforced by a court and those established by a professional association for the good governance of the profession. The latter may be relevant to the question of the proper administration of justice, to which I return below, but a professional body may seek to impose obligations of professional conduct which go beyond duties enforceable in law.
In relation to Scots law, I note the observation of Lord Johnston in Connolly and Connelly v Brown. He accepted that, if there was some speciality of personal ascendency by the agent over the principal or some use of special knowledge, such circumstances could lead to a continuing legal duty. He seemed more doubtful about the possibility of a continuing duty based on “the confidence created by the agency relationship” but allowed a proof before answer to explore the whole circumstances. This approach seems to me consistent with acceptance of a need to establish some special feature before there could be said to be any continuing duty of loyalty. That decision seems to be the high point of Scottish authority. It was an ordinary agency case, not one about a solicitor.
[52] When Lady Dorrian had to consider the Connolly case after a proof before answer, it became clear that the context was not truly of duties arising after termination of the agency but of the continuing effect, if any, of duties arising before that time. It appeared to be accepted that for there to be a continuing duty after termination of the agency, something unusual by way of special reliance was required. The defender in the present case did not point to any special features. Indeed, any special features in the present case seem to point in the opposite direction. Mr Moore’s involvement was extremely limited and it is not suggested that the defender has had any dealings with him for about 15 years. Apart from the question of confidential material there is no practical reason to prevent his new firm acting against the defender.
[53] Put shortly it can be said that the court was not directed to any clear authority for the proposition that there is any continuing legally enforceable obligation of loyalty in Scots law arising in the normal course after termination of the formal relationship. The unanimous decision of the House of Lords in Bolkiah, as expressed by Lord Millett, is that there is no such obligation in English law. After touching on the protection to be given to an existing client Lord Millett continued:
“Where the court’s intervention is sought by a former client, however, the position is entirely different. The court’s jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the relationship. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the relationship is a continuing duty to preserve the confidentiality of the information imparted during its subsistence.”
I see no justification for any distinction between Scots and English law on this issue. The scope of a stand-alone obligation of loyalty arising after termination of the agency is vague and uncertain and I have read nothing to persuade me that it is a concept of practical value. I have no difficulty in accepting that there will be circumstances where obligations arising during the agency may have long-term implications which might loosely be described in terms of a continuing obligation of loyalty. There may be cases where an agent should not be allowed to take advantage of a situation created during the subsistence of the agency even if the offending conduct is after its termination. Plainly there is a continuing obligation not to misuse confidential information. Reference to a continuing duty of loyalty may be quite appropriate in such cases but if there is no connection between the current actings and the obligations incumbent during the agency, I do not consider “loyalty” an adequate basis for legal obligation.
[54] Apart from the Court of Victoria in Australia and, possibly, courts in the USA, we were not directed to material from any jurisdiction which has rejected the Bolkiah approach. In Victoria, the matter was discussed explicitly in Spincode where Brooking J.A. after quoting Lord Millett’s opinion that the solicitor had no continuing obligation to defend or advance the interests of a former client, accepted that active duties stopped but asked rhetorically: “Why should we not say that loyalty imposes an abiding negative obligation not to act against the former client in the same matter? The wider view and the one which commends itself to me as fair and just is that the equitable obligation of “loyalty” is not observed by a solicitor who acts against a former client in the same matter.” I might pause to observe that this is far from a principled analysis of the nature and extent of the continuing obligation and the use of quotation marks suggests that the judge was aware that it was a concept that might need some refinement before it could be of any practical value. I find nothing in the various observations in that case which would provide any secure justification for an enforceable obligation.
[55] Brooking J.A. did go on to cite various references to cases or writings referring to a continuing duty but I have not found it easy to identify any decision or commentary clearly based on a pure concept of continuing loyalty as opposed to dicta in cases where there was a related risk of abuse of confidential material or misuse of some advantage obtained before termination of the agency contract. Spincode did not involve any attempt to provide a rational exposition of the nature and extent of the duty. The other two judges expressly based their decisions on issues of confidentiality and not on any wider duty of loyalty. It appears, however, that the existence of a duty of loyalty may have subsequently been accepted in Victoria although none of the cases cited attempted to analyse it in any detail and or appear to have faced a need to apply it on its own as a basis for decision. The defender referred to the case of Pinnacle Living Pty Ltd. But that was a case where the issue did not arise sharply. It appears to have been a matter of concession in a context where there had not, in fact, been any real “changing of sides”: at [35]. The substantive submissions appear to have been advanced in terms of public policy rather than based on any obligation of continuing loyalty as such. Two lawyers from Victoria, Russell Cocks and Elizabeth Klein, in a paper “Crossing over - The blurred lines of a lawyer’s duty of loyalty”, express the view that the basis of restraint based on a duty of loyalty and one based on public perception of the integrity of the justice system is really just a difference of formulation rather than one of substance. I think it plain that the existence or otherwise of an enforceable duty of continuing loyalty to a former client must be viewed as a quite separate issue from the public perception of due administration of justice although, in very general terms, the idea of loyalty may be taken into account as part of the latter.
[56] I accept Mr Ellis’s analysis of the law in the other Australian states, New Zealand and Canada to the effect that it gives no support for a legal duty of loyalty persisting after termination. This does not exclude the possibility of a Law Society or professional body of lawyers treating the concept of loyalty as something to be encouraged and doing so in terms which may blur the line between loyalty to a client and persisting loyalty after the lawyer has performed the work for which he was instructed. Potential clients might like to hear that they are to receive some sort of long-term commitment. This might encourage them to regard the relationship as an enduring one. But such commitment will not easily be converted into a positive obligation. In the circumstances of the present case, it is not easy to see that it would, of itself, advance matters and, indeed, it is not really contended by the defender that it would. Mr Moore himself has no direct involvement with her case. Her express concern relates to confidential information deriving from him. Absent that feature I think it would be hard to formulate a duty which would have any causal bearing on the matter. Even Paterson and Ritchie, authors of Law Practice and Conduct for Solicitors, accept that the duty of loyalty “diminishes with the passage of time”: 7.22.02 footnote. BLM as a firm have no duty of loyalty to the defender. Any duty would lie on Mr Moore. On any view of the matter, I find it impossible in the present case to identify any relevant obligation which might be said to be based on a legal duty of loyalty other than the need to protect confidential material. That can readily be treated as a separate duty.
[57] But I accept that the public perception of a lawyer’s role might be expressed in terms of loyalty and that the concept might possibly play a part in a broad consideration of whether the court should take steps in the interest of the proper administration of justice. It was not disputed that the court did have a general power to prevent a solicitor from acting where to do so was necessary in the interests of administration of justice. That is discussed in some detail in the Australian cases and there is clearly some force in the views expressed in Spincroft on that topic. The principle that justice must be seen to be done can be pressed too far and is subject to the criticism on the one hand that it does not provide a very clear test and on the other than once the relevant member of the public is to be taken to be properly informed there may be little content left in it. As the litigant directly involved can be taken to be fully informed as to the full circumstances and absence of any practical prejudice, there will seldom be any positive benefit to such litigant in taking a plea on that basis alone - although it could, no doubt, be used to cause tactical difficulties for the opponent. However, the need for justice to be seen to be done has always been regarded as an important over-arching principle and one which the court can raise for itself. This was not a matter of express discussion in Bolkiah.
[58] Lord Millett did say that “the basis of the court’s jurisdiction” to intervene on behalf of a former client was not based on the avoidance of possible impropriety but on the protection of confidential information: at page 234. The explicit identification of “the basis” can be read as meaning that in the context of a changing sides case he considered that the court’s power to preserve public confidence in the administration of justice could have no bearing. But it is trite that protection of such confidence depends on perception and not on any question of actual impropriety. When the facts are fully understood there may be few cases where the properly informed public would have real cause of concern if no question of possible misuse of confidential information arose. But cases can, I think, be figured and it seems to me to read too much into Lord Millett’s observation to read it as intended to say that protection of public confidence has no residual place. It may be added that Bolkiah was about accountants. While issues of confidentiality and duty as agents might be similar in relation to both, the role of solicitors in relation to the public perception of the proper administration of justice is plainly different. I do not think that the dictum in Bolkiah could have been intended to go so far as to say that in a changing sides case, the power of the court to prevent a particular lawyer from acting in circumstances where the court considered that necessary in the interests of maintaining public confidence in the proper administration of justice was excluded as a matter of law or that, as a matter of fact, the issue could never arise in such a case.
[59] I do not find it difficult to envisage situations where the public would expect the court to intervene. The practical difficulties arise in cases involving firms. It is to be expected that, in modern times of mergers and very large practices, solicitors may find themselves involved, in one role or another, in a firm acting against a client of a firm in which they were previously involved. Such cases raise a variety of practical factual problems as well as questions of the balancing of interests. I have no doubt that in the overwhelming majority the only issue will be the adequacy or otherwise of information barriers to prevent the risk of misuse of any confidential information. The possibility of the issue only coming to light at a late stage is simply one illustration of the serious practical difficulties which have to be taken into account. But a direct change of sides by a single solicitor acting in the same litigation against a former client seems to me to be quite a different matter. I am not aware of any case where an individual solicitor has been allowed – or even attempted – to change sides in the middle of a litigation to act directly for the other side. But, if there was not a clear understanding that this was impermissible there might well have been examples of a wealthy party seeking to buy advantage in this way. Any solicitor would know that their professional body would take a dim view and I think that public confidence in the administration of justice would be shaken if the court permitted it to happen. It may be noted that it could well raise practical issues beyond that of confidentiality. If the solicitor simply terminated one agency to move to an opposing client there would be an obvious issue of duplication of expense for the existing client but there could well be other problems. For example, a client who had been encouraged to regard the solicitor as a supporter, might have a sense of outrage which would adversely affect their ability to cope with cross‑examination by such person: not because of fear of disclosure of confidential material but simply as a matter of personal dynamics. Such extreme examples would not be expected to arise in practice because, whatever the financial incentive, it would I think be quite clear to everyone that the court would not be expected to allow it.
[60] Mr Ellis cited authority from New Zealand in support of the proposition that the inherent power of the court to prevent a particular lawyer from acting was one where the threshold for removal was high and only to be used for something extraordinary. I do not think it necessary to express the matter in terms of a special threshold. In dealing with public confidence in the proper administration of justice, cases will turn on their own facts. The proper assessment will place considerable weight on the absence of any practical prejudice to the client if there is no risk of misuse of confidential information. I have no doubt that in practice, there will be many situations where a solicitor has changed firms and where it will be quite clear that such solicitor is not in any real sense acting or actively involved in the litigation against the former client. If it was clear that there was no risk of misuse of confidential material a fair minded member of the public, with an adequate understanding of the facts, would see no threat to the proper administration of justice. In my view, the present is such a case.
[61] I have no difficulty in accepting that Lady Christ will have experienced some surprise and possibly irritation when she found out what had happened. She is certainly entitled to expect the court to protect confidential material. However, that issue apart, I am not persuaded that the particular circumstances of this case disclose a situation where right thinking members of the public would have any real concern about the continuing role of Mr Moore. On any view, a firm asked to act in a litigation where one of its partners, employees or associates has previously acted in that litigation for the other side requires to exercise great care and I was surprised to find that the solicitors in this case had been aware of the difficulty and agreed to act in the circumstances of this case. On the other hand, I understood the explanation that the pursuers had a long established connection with the solicitors in question and this might have been a factor to take into account had we been involved in a detailed balancing of interests. On any view, I would have expected them to take steps to ensure that information barriers were in place to prevent any dissemination of confidential material rather than rely on their own bald assertion that the information held was not confidential. However, having considered the detail of Mr Moore’s role I am not persuaded that the present case is one where the interests of justice require the court to bar the employment of BLM. In other words, I consider that the issue does, indeed, turn simply on the possible use of confidential information.
[62] The law relating to protection of confidential information as set out in Bolkiah was not challenged. The primary issue in relation to the consequences of Mr Moore’s involvement in the firm of BLM turns on the risk of disclosure of any material which still falls to be regarded as confidential in light of the defender’s own disclosure to date.
[63] Before looking at the detail of Bolkiah I comment for completeness on the reference made by the defender to the decision in Cleland v Morrison (1878) 6R 156. That was to the effect the knowledge of one partner is to be taken to be the knowledge of all. Whether there might be other legal contexts in which such a principle would fall to be applied is a matter which I need not consider. In the present context, it is enough to say that Mr Moore is not currently a partner of BLM and I am not aware of any wider principle that the knowledge of any member of staff is attributed to all staff. The principle of deemed knowledge of partners was not applied in Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831 which was discussed in Bolkiah without criticism on that point. The willingness to accept information barriers in modern practice is inconsistent with application of that principle in the present context. In the context of a change of side’s case a more limited principle may be applicable. The client may be taken to have the benefit of a rebuttable presumption that knowledge will pass freely around the firm unless some practical information barrier has prevented it. The defender would have the benefit of such a principle but the pursuers’ position in this case is not that confidential information is protected by an information barrier but that there is nothing still entitled to protection.
[64] Bolkiah was a claim against accountants. However, the Court expressly referred to solicitors and accountants and the observations of Lord Millett in relation to confidentiality were plainly intended to cover both. Accordingly when considering the issues of confidentiality in the context of the facts of the present case I see no difficulty in accepting the approach taken in that case. Lord Millet dealt with the issue of confidentiality in the following terms:
“Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one”: 235D to E.
[65] It is clear that the test is whether there is any real risk that relevant confidential information may come into the hands of a person with an adverse interest. The test of whether there was a “reasonable probability of real mischief” applied in Rakusen’s case was disapproved. The court took the view that the former client should not be exposed to any avoidable risk, however slight, that information which he, or she, imparted in confidence in the course of a fiduciary relationship may come into the hands of a third party and be used to the client’s disadvantage: p 236 F-G. Mr Ellis expressly accepted this test.
[66] The court in Bolkiah took the view that the onus was on the client to establish the risk although it was observed that the burden was not a high one. That case was a direct action against the former professional advisers. In that context, it may be reasonable to leave the onus on the client to establish the risk. The material in question will be known to both parties. It is different where the dispute is over risk of disclosure to one of the parties in the litigation itself. It is sufficient to say that I see considerable force in the observations of Lightman J in In re a Firm of Solicitors [1997] Ch 1. He plainly was of the view that the burden had to be on the former solicitor to show that he was not in possession of any relevant confidential information or that there was no risk of misuse of sensitive information. Where, as here, a third party is involved and the risk of disclosure to that party is in issue, I am not yet persuaded that there is any justification for the client requiring to meet even a nominal onus. However, it is not necessary to express a view on the initial onus in the present case because Lady Christ has founded explicitly on specified material namely that in the sealed envelope and the pursuers have not attempted to rely on any information barrier within the firm. In any event, I understood Mr Ellis to accept that if there was any doubt it would ultimately be for the pursuers to satisfy us that there was no risk of relevant confidential material held by BLM being disclosed to the pursuers or used on their behalf.
[67] The issue of confidentiality turns on the nature of the material deriving from the defender and held by BLM, whether any of it falls to be regarded as now entitled to protection and, if so, whether disclosure of it to the pursuers or anyone acting on their behalf could have any relevant impact on the current litigation. It is important to bear in mind throughout that all discussions between the solicitor and his client and all material provided to the solicitor by the client must be taken to be confidential unless there is some reason to displace such confidentiality. In this case the contention is that there is nothing to protect because all relevant material has already been openly disclosed by the defender. The second potential question, that of the bearing any confidential material might have on the litigation, does not arise sharply. The test for protection, as expressed by Lord Millett, is limited to material which could be used to the defender’s disadvantage in the context of the litigation, and it is enough to say that I would not see it as imposing a high test. But, a client is entitled to have confidential material kept confidential I have some doubt as to the basis for any need to establish that release of it would be to the client’s disadvantage. The real answer on this aspect seems to me the practical one that where confidential material could have no realistic bearing on any issues in dispute there would be no reason to restrict disclosure within the firm and there would be no reason for disclosure outside the firm either to the opposing party – or, indeed, to any other party. There would be no justification for the court intervening to prevent disclosure when there was no reason to fear it happening.
[68] Before dealing with the material in the sealed envelope, it is right to note various aspects of the general background against which I considered it appropriate to look at that material. Mr Moore’s initial role was a limited one. There was no reason to suppose that the defender disclosed material to him inconsistent with her stated lines of defence. The letter of 6 December 2000 contained the confidential advice Mr Moore gave to the defender after considering all the material supplied to him by her. It would have been reasonable to assume that any material prejudicial to her would have been commented on in such a letter. She made open disclosure of that letter. But, in any event it was not suggested that there was anything material in the letter which had not been properly disclosed to the pursuers either in the pleadings or in open court. Indeed, in the present case, where the defender has expressed her outrage at the nature of the pursuers’ assertions, it would have been be reasonable to proceed on the basis of an assumption that the defender did not intend anything to be hidden and that all the material given to Mr Moore was intended, at the time it was given, to be used in open rebuttal of the pursuers’ action. In short, it is not possible to identify by inference any type of material which the defender might have been expected to have provided in the expectation of it remaining confidential. Lady Christ founded explicitly on the material in the sealed envelope. She asked us to determine the matter by examining that material.
[69] In light of these various considerations I was satisfied that it was necessary for us to look at the material in the envelope. I think it fair to say that there was a concern that this course of action might give rise to some further procedural difficulties. In the event, the nature of the material was unambiguous and it is unnecessary to say much about the potential difficulties. I had in mind that, if there had been any doubt, it might have been necessary to hear further submissions and this would have required some special steps to try to ensure that there was no inappropriate disclosure.
[70] The court opened the envelope to find a further sealed envelope with a detailed label saying that it contained a “Third Party Witness Statement and Precognition taken by George Moore”. The label also repeated the assertions that this was “Privilege Relevant Confidential Communication” covered by “Legal Professional Privilege”. We found a statement which on the face of it was indeed a statement taken by Mr Moore with a covering letter to the witness asking for any correction or change.
[71] It may be noted that the material was, on the face of it, derived by Mr Moore direct from the third party rather than given to him by his client, the defender. There might well be cases where that distinction would require further analysis. But, for present purposes, I have simply proceeded on the view that the identity of the third party and the terms of that party’s precognition are to be treated as confidential and subject to the same protection as information given direct to the solicitor by a client.
[72] However, I have had little difficulty in concluding that identification of a potential witness in this case involves no relevant breach of confidentiality. The precognition was taken from Keith Anthony Whitehouse, described as the husband of the defender. As his role was a key issue in relation to the main action he would have been an obvious witness. The pursuers might have cited him as a witness. They would have been entitled to try to take a statement from him themselves.
[73] Having studied the terms of the precognition I am entirely satisfied that it adds nothing of significance to material already set out in the defences and productions. It appears on all points to do little more than support the line of defence already set out in the pleadings. It, of course, fleshes that out on matters of detail but none of that detail seems to me to be of any particular relevance. The statement does not touch on quantification of the claim to indemnity under the policy. I have found nothing of significance in it which could be regarded as going beyond the matters freely disclosed by the defender as part of the defence to the main action. Certainly there is nothing in it which Mr Moore would have felt in any way constrained about disclosing to the pursuers had he been instructed to continue to act for the defender in the litigation.
[74] It may be added, for completeness and without expressing any view of the relevance of the point, that I am also satisfied that there is nothing in the precognition disclosure of which could possibly be regarded as adverse to the defender’s interests in the litigation. Even if Mr Moore and BLM are still in possession of the original precognition, there is no reason to fear that anything in it could be used for the benefit of the pursuers. It can also be said that there was no reason to think that Mr Moore had any involvement in matters relating to quantum and nothing in the precognition has any significant bearing on that issue.
[75] I am now satisfied that there is no good reason why the firm of BLM should not act for the pursuers. The defender’s opposed motion must be refused. The action can proceed on that basis. The defender’s various contentions as to the consequences of BLM being instructed will not need now to be considered further. The case will need to be put out for hearing before the original bench. That bench should be invited to consider whether any specific instruction should be given before the hearing.