SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 6089 of 2001

SPINCODE PTY. LTD. Appellant

v.

LOOK SOFTWARE PTY. LTD. & ORS Respondents

---

JUDGES: BROOKING, ORMISTON and CHERNOV, JJ.A.

WHERE HELD: MELBOURNE
DATES OF HEARING: 27 and 28 November 2001
DATE OF JUDGMENT: 21 December 2001
MEDIUM NEUTRAL CITATION: [2001] VSCA 248 1st Revision 21 December 2001

---

LEGAL PRACTITIONERS Solicitors acting against former client Injunction granted

Possible misuse of confidential information Fiduciary duty of loyalty Restraining
solicitors as officers of the Court.

---

APPEARANCES: Counsel Solicitors

For the Appellant Mr R. Kendall, Q.C. and Darrer Muir Fleiter

Mr A. Panna

For the Respondents Mr T.J.P. Walker Logie Smith Lanyon

VICTORIAN GOVERNMENT REPORTING SERVICE 9603 2404

1st Floor, 167 Queen Street, Melbourne
-1
BROOKING, J.A.:

1 On 16 October 1995 Look Software Pty. Ltd. (the company) was

incorporated for the purpose of developing and selling software. The company was

formed by Robert Louis Moore and Gavin John Rogers. It has been far from

punctilious in recording the issue and allotment of shares, but it seems that on its

incorporation 50 shares were allotted to Spincode Pty. Ltd. (Spincode), Moores

company, and 50 shares to G-Wiz Pty. Ltd. (G-Wiz), a company controlled by

Rogers. Moore and Rogers became the companys first directors. Some time after

the incorporation of the company Marcus Brian Dee was employed by it and in

August 1996 he was appointed a director and 50 of its shares were allotted to him.

Just how the position was arrived at is not entirely clear, but in the result by

September 1996 Spincode, G-Wiz and Dee were the shareholders in the company,

each holding 50 shares.

2 In about April 1996 Brendan Norman James Kay and David Kay started

working for the company. In January 1997 discussions took place between Moore,

Rogers, Dee and the two Kays (the participants) about an arrangement whereby

shares should be allotted to the Kays with the result that the shareholdings would be

as follows:

Spincode 30%

G-Wiz 30%

Dee 25%

Brendan Kay 7.5%

David Kay 7.5%

The making of an arrangement to that effect does not seem to be seriously in dispute,

although Moore says it was conditional.

3 The history of the companys affairs, culminating in the litigation begun in

May 2001, follows a course not unfamiliar where persons of limited capital come

together and form a company to develop and sell a product. Work is done and

expenses incurred with little or no revenue in the early stages. There are discussions

Spincode v. Look Software & Ors 1 BROOKING, J.A.

 about deferred remuneration and reimbursement and about shareholding and the

division of the profits which it is hoped will ultimately be achieved. Shareholders

agreements, sometimes oral, sometimes evidenced in part by writing, may be

alleged to have been made.

4 In this case we are not concerned with the resolution of the disputes which

have, not surprisingly, arisen except as regards one aspect of the means by which

they are to be resolved. For we have before us an appeal by Spincode against an

injunction granted to prevent a firm of solicitors from continuing to act for it in the

proceedings it has taken to have the company wound up or obtain some relief short

of winding up. The injunction was granted by Warren, J. on 17 August last. In the

principal proceeding Spincode is plaintiff and the defendants are the company, Dee,

G-Wiz and the two Kays. The plaintiff seeks either a winding up or an order for the

purchase of its shares at a valuation and relies on the oppression and just and

equitable grounds. The order of Warren, J. was made on an interlocutory application

launched on 21 June 2001 in the principal proceeding by the defendants. That

application was directed both to the plaintiff, Spincode, and to the solicitors

concerned, McPherson + Kelley (who use not an ampersand but a plus sign in the

name under which they practise). The solicitors were not represented on the hearing

of the application; her Honour was told by counsel for Spincode that they adopted a

neutral stance towards it. The order under appeal restrains McPherson + Kelley

from acting or from continuing to act in this proceeding on behalf of the plaintiff

and/or Robert Louis Moore or either of them, until the final hearing and

determination of this proceeding. The appellant has pointed out that Moore was

not a respondent to the application for an injunction but has not suggested that we

should for this reason vary the injunction.

5 The question whether a particular solicitor may act in litigation might be

thought to be clearly interlocutory as between the parties to that litigation. As I have

said, the solicitors, although made respondents to the application, played no part on

the hearing. They have not appealed against the order. While no injunction was

Spincode v. Look Software & Ors 2 BROOKING, J.A.

 granted against the plaintiff restraining it from employing the solicitors, the present

case would seem to be one of granting or refusing an injunction within the

meaning of sub-paragraph (ii) of paragraph (b) of s.17A of the Supreme Court Act

1986, so as to make leave to appeal unnecessary. This might be thought anomalous.

6 The defendants to the winding up proceedings, including the company itself,

have made common cause and have been represented by the same solicitors, Logie-

Smith Lanyon. The application for an injunction was made by them all. Material

treated by the parties as available to the judge for the purposes of the injunction

application comprised the winding up application itself, the affidavit in support of it

made by Moore, an affidavit by Dee, an affidavit by Rogers and an affidavit by

Moore in response to that of Rogers. Two members of the firm of McPherson +

Kelley made affidavits in opposition to the application, one of them being Paul

Kirton, the member of the firm who had been concerned from about September 2000,

and the other Sven Bier, the partner who had come into the matter in about January

2001. There were numerous exhibits to most of the affidavits. The only oral

evidence was that of Kirton, who was cross-examined on his affidavit. There was in

addition a good deal of other documentary evidence before the judge, much if not all

of it coming from the file of McPherson + Kelley, access to which was ultimately

obtained by the defendants. An order for an expedited hearing of the appeal having

been made, and the two volume appeal book having been found to contain by no

means all the necessary material, a supplementary appeal book was prepared at a

late stage. Unfortunately many of the documents it contains are not indexed.

7 I return to my brief account of the history of the company before the dispute

about representation which led to the injunction. I had reached the point of

mentioning that there did not appear to be any serious dispute about the fact that an

arrangement was made that shares should be held by five persons, not three, each

with a given percentage, although Spincode says that this arrangement was subject

to satisfactory performance of their duties by the Kays. It seems to be common

ground that in the first half of 1997 discussions took place between the participants,

Spincode v. Look Software & Ors 3 BROOKING, J.A.

 not only about shareholdings in the five percentages I have mentioned, but also

about profit distribution and the need for consulting fees for the services provided

by each participant to be paid, not at the time of performance of those services, but

when the company was in a financial position to make payment. Disputes arose, in

particular about whether agreement had been reached, in about June 1997 or at all,

for what is called in the defendants affidavits equalisation. It is the defendants

case, and both Rogers and Dee depose to the fact, that in about June 1997 the

participants agreed that the company would be invoiced for services rendered to it

by them at a rate only sufficient to meet their living expenses and that, once the

company was in a position to pay, any differences in the total amounts paid in

respect of the services of the five would be eliminated in order to achieve

equalisation. It is the defendants case that Moore refused to honour this

agreement. They say that in about September 2000 he proposed to implement the

agreements that had been arrived at only to the extent of seeing that the participants

or their companies held shares in the agreed percentages.

8 And so from about September 2000 there were disputes. The role played by

Kirton in them is the real origin of the sense of grievance which I have no doubt

Rogers, Dee and the Kays feel about the later conduct of McPherson + Kelley. I am

not going to summarise in detail what the affidavits and other material disclose

about the course of the dispute in the three months or so which ensued after it arose.

There were numerous discussions between those concerned. At one stage Moore

was hoping to induce Dee to agree to get rid of Rogers as a director. But in the end it

was Moore himself who left the board.

9 McPherson + Kelley had a longstanding connection with the company. As I

have said, they had acted on its incorporation. The uncontradicted evidence was

that, at least until the time when internal disputes arose in about September 2000

the firm had acted for the company ever since its incorporation in all legal matters

concerning it and that these included there were evidently other matters the

drafting of software licence agreements, the drafting and reviewing of

Spincode v. Look Software & Ors 4 BROOKING, J.A.

 distributorship agreements and application service provider agreements, the

registration of trademarks and agreements with contractors. McPherson + Kelley

undoubtedly acted in relation to the disputes which arose in about September.

Before us it was conceded by the appellant that in so acting they had the company as

their client. It was also conceded by the appellant before us that the disputes in

relation to which the firm acted for the company were disputes which, if not

resolved, would naturally culminate in an application to wind up the company of

the kind ultimately made. One of the remarkable things about this case is that the

plaintiff, before her Honour, argued that in the months in question McPherson +

Kelley had not acted for the company. It is also remarkable that McPherson + Kelley

should itself have denied the existence of that retainer. I shall come back to this.

10 As regards the course of the dispute leading to the winding up application,

and the role of the solicitors, I shall mention briefly a number of events, commencing

in September 2000. On 27 September Moore telephoned Kirton and told him he

wanted to change the shareholder set up and to have a shareholder agreement to

change the controls or conditions on shareholding. As a result, on 10 October Kirton

had a meeting with Moore, Dee and Jim Milligan, the manager of the company. At

that meeting some person or persons expressed concern that Rogers was not

contributing enough to the business and that he might have been disclosing

information to the Kays about payments made to directors. Shareholders

agreements and employee share plans were discussed in a general way. Kirtons

evidence, and his file note, show that someone told him of arrangements made

between the participants about four years earlier; there is reference to the Kays and

7.5% each and to distribution of profit 50% in proportion and 50% equally.

He was told that one of the two brothers was now saying that they did not agree

(this probably means had not agreed) and wanted more than 15% notwithstanding

that he had taken money in accordance with the agreement. What Rogers wanted

and whether he would take a payout was discussed.

11 On 5 October a meeting of the five participants had been held at Moores

Spincode v. Look Software & Ors 5 BROOKING, J.A.

 home at which David Kay suggested that he and his brother should each be given

not a 7.5% but a 15% shareholding. The defendants say that at the meeting Moore

did not dispute the existence of the so-called equalisation agreement but said that

payments made to each participant were water under the bridge and that

equalisation payments should not be made. On 16 October Moore told Kirton that

he would arrange another meeting next month to discuss a shareholders agreement.

12 When access to the solicitors file was ultimately obtained it disclosed that on

10 October Kirton had given instructions for the opening of a file in the matter of

shareholder advice, the company being named as client. The handwriting

describing the service is hard to decipher but the words used were evidently to

provide initial and ongoing advice on the addressing the concerns of the

shareholders. Having named the company as the client the checklist went on to

give two contact names those of Moore and Dee.

13 On 18 October McPherson + Kelley sent a letter addressed to Mr Bob Moore,

Look Software Pty. Ltd., headed Shareholder Advice and setting out the terms of

the agreement between you and the firm. The agreed work was described as

advising on the issues concerning the shareholders of the company. It is convenient

to record here that all the solicitors bills of costs were directed to and paid by the

company. Each of them, having been directed to the company, went on to refer to

the costs of acting on your behalf in relation to the matter of shareholder advice.

Particulars were given of each item of work. The first bill of costs was dated

27 October and related to work done between 27 September and 16 October. It was

for $1,287. The second bill covered the period 20-29 November and was for

$2,325.40; it was dated 29 November. The third bill of costs, dated 21 December,

was sent under cover of a letter dated 2 January to Milligan. It related to work

between 8 and 21 December and was for $1,551. The fourth and last bill of costs was

dated 30 January. It related only to a telephone conversation of 2 January with

Moore and was for $165. No bill of costs was ever directed to Moore.

14 Late in November Kirton drafted a shareholders agreement and an employee

Spincode v. Look Software & Ors 6 BROOKING, J.A.

 share plan and these, together with a service trust scheme he had prepared, were

tabled at a meeting held at Moores home on 30 November 2000 and attended by the

five participants. (Before the meeting, Kirton had submitted a draft of the agreement

to Moore and then altered the draft in accordance with Moores suggestions.) At the

meeting on 30 November Moore made a claim to be reimbursed $70,818, which he

said represented expenses incurred in the preceding five years and not previously

claimed by him. The others rejected this claim. Moore became annoyed, offered to

resign as a director and declared the meeting closed.

15 Another meeting of the participants was held at Moores home on

7 December, followed by a further meeting on 15 December and yet another on

22 December. It is not necessary to set out the parties competing versions of what

took place at those meetings. It is enough to say that Moore unsuccessfully pressed

for acceptance of the shareholders agreement and employee share plan prepared by

Kirton, that by the end of the year the disputes were still unresolved and that in

January an unsuccessful mediation was conducted.

16 Whatever might be said of Moore, the evidence was that all the other

participants believed that Kirton was acting for the company at the meetings which

took place.

17 The mediation, which obviously was never going to succeed, collapsed by

about 22 January. On 1 February Dee, who had recently become managing director

of the company, was surprised to receive, in that capacity, a facsimile letter from the

companys solicitors, McPherson + Kelley, beginning We act for Robert Louis

Moore and Spincode Pty. Ltd., making a series of allegations and complaints,

raising the possibility that the company would be wound up or that the shares held

indirectly by Moore would be acquired and ending with an implied threat of legal

action if no settlement was arrived at. Dee, who had understandably regarded

McPherson + Kelley as the companys solicitors, acting for it both generally and in

the internecine disputes that had arisen, telephoned Kirton and expressed his

surprise. Kirton said he was not aware of the facsimile. It had in fact been sent by

Spincode v. Look Software & Ors 7 BROOKING, J.A.

 another partner, Bier, who had acted for Moore in 1994. Shortly after this the

defendants present solicitors, Logie-Smith Lanyon, began to act for them and a

prolonged correspondence ensued between the two firms of solicitors in which

constant complaint was made that McPherson + Kelley, having always acted for the

company, and having in particular acted for it in relation to the disputes which were

now moving towards litigation, should act no further. The position taken up by

McPherson + Kelley in this correspondence is remarkable and reprehensible. By

letter dated 8 February, having identified your client as the company, McPherson

+ Kelley asserted that it had not acted nor provided advice personally to your

clients. Later, in its letter of 23 February, when faced with more documentary

material, McPherson + Kelley modified its stance, asserting, We no longer act for

Look Software Pty. Ltd. Your firm does. The letter went on to assert that at the

time of the dispute between the participants Kirton had been acting for Moore and

also to assert, by clear implication, that he had been acting for no-one else. The bills

of costs showing the firm to have acted for the company in the very matter of the

dispute were dismissed on the ground that their delivery does not give rise to a

conflict of interest. It having been successfully established by Logie-Smith Lanyon,

by the production of documents, that McPherson + Kelley had acted for the

company in drafting distribution agreements, McPherson + Kelley observed, Those

distribution agreements do not bear the name of this firm, as if intending to rely on

some difficulty of proof their former client might face.

18 Kirton does not come out of this affair well. He made an affidavit on 28 June

which was filed by his firm on behalf of Spincode in opposition to the application for

an injunction. (The firm acted for Spincode on that application but has not acted on

the appeal.) It is a remarkable affidavit. I shall not go through it paragraph by

paragraph. It is throughout calculated to give the impression that in everything

which he did in relation to the companys affairs between September 2000 and early

January 2001 he was acting for Moore, and for Moore alone. Kirton makes no

reference to the bills of costs naming the company as the client and their payment by

the company. Nor does he mention the form he filled out on 10 October naming the

Spincode v. Look Software & Ors 8 BROOKING, J.A.

 company as client and giving two contact names not only that of Moore but also

that of Dee. This checklist is obviously the foundation for the letter which

McPherson + Kelley sent on 18 October. A funds received advice form of

McPherson + Kelley was put in evidence naming the company as the client in

relation to shareholder advice. Journal vouchers named the company as client. So

did a producers billing guide.

19 Cross-examined, and asked whether he denied that McPherson + Kelley acted

for the company in relation to the shareholder advice matter, Kirton answered Im

unclear on that. Initially Im not too sure. Id like to turn my mind to the issue of

who we acted for. One would have thought he would have turned his mind to that

question before entering the witness box and indeed before making his affidavit, not

to mention the time at which he was providing his services. The whole of his cross-

examination is worth reading.

20 The ambivalence characterising Kirtons evidence is reflected in his conduct in

the months in question. One would have expected a solicitor acting for the company

in an attempt to sort out disagreements among those who were or intended to

become shareholders in it to act as an honest broker and not to seek to advance

covertly the interests of one person at the expense of another. But honest broker

Kirton was not. This is shown by his cross-examination and the documents obtained

from his firm. His file note of 24 November contains the words Bob wants total

control followed by an arrow and the words veto right on issues of substance.

An undated file note contains, in relation to the proposed shareholders agreement,

these striking words: Bob wants control but cant explicitly state. The same note,

opposite the word allegiances, puts Moore and Dee on one side and Rogers and

the Kay brothers on the other. The whole note is evidently a record of instructions

given by Moore about the draft shareholders agreement. A later note shows Kirton

advising Moore on 2 January 2001 about a possible winding up. This piece of advice

is the subject of the last bill of costs to the company, that dated 30 January, prudently

dispatched before Bier wrote his letter of demand of 1 February which mentioned,

Spincode v. Look Software & Ors 9 BROOKING, J.A.

 among many other things, winding up. The company has paid that bill, like all the

others.

21 Documents in the solicitors file show that another solicitor in the practice

provided Kirton with a memorandum dated 24 November dealing with the steps

necessary to remove a director, and a notation shows that on the same day Kirton

conveyed this information to Moore. The bill of costs of 29 November shows this

advice being charged to the company. Other material shows that at this time Moore

was trying to get Dee to agree to the removal of Rogers as a director because of the

danger that Rogers would tell the Kays how much money the directors were

receiving. The documents also show that Kirton reported by telephone to Moore

when Rogers (who was, after all, a director) approached him to obtain company

documents. The shareholders agreement drawn by Kirton on instructions taken

from Moore, and redrawn by Kirton on the instructions of Moore, was on the

uncontradicted evidence warmly commended to the meeting by Kirton as the best

solution. It was the solution for which Moore was pressing.

22 Warren, J. found that confidential information, relevant to matters in dispute

in the litigation, had been obtained by the solicitors from the company. She was

right to do so. It is shown by Kirtons own evidence that, when he attended

meetings of some or all of the participants, they were on occasions discussing with

him or at least in his presence (to use his own words) whether there was an

agreement between the shareholders, what constituted that agreement and whether

there should be an agreement and what the content of that agreement should be1.

The affidavits make it plain that the disputes between the participants, to assist in

the resolution of which the company employed the solicitors, included disputes

about whether the participants had reached agreement on a number of points in the

course of the companys history and about the terms upon which they had agreed.

I have earlier mentioned a file note of Kirtons which shows that arrangements made

1 See paragraphs 37 and 38 of Kirtons affidavit. Of course this is by no means the only
evidence on the point.

Spincode v. Look Software & Ors 10 BROOKING, J.A.

 between the participants about four years earlier were discussed, and the references

made in it to the Kays and 7.5% each and to distribution of profit 50% in

proportion and 50% equally and to other relevant matters. The fact that Moore is

said by Kirton to have been always present during these discussions does not mean

that the information imparted was not confidential in the necessary sense; this

fallacy underlay a submission repeatedly put to us by the appellant.

23 The potentially wide-ranging nature of the inquiry in the principal proceeding

is relevant2. A range of matters discussed with or in the presence of Kirton are likely

to be investigated. Despite the argument put to us I would not exclude the

respective contributions of Moore and Rogers to the development of the NewLook

software. There is evidence that the solicitors acted for the company in matters

concerning ownership of the copyright in that software, a question likely to arise at

least indirectly in the present litigation.

24 There is no reason to doubt the correctness of her Honours view that the

appellant had failed to show that there was no real risk of the misuse of the

confidential information3 and that the respondents had shown a real and sensible

possibility of that misuse4.

25 But the judge did not found herself on this alone and so her judgment raises a

much wider question. Strictly, we need not consider that question. It would be

enough to say that the decision below can be supported, on the most narrow view of

the law, as resting on confidential information and its possible misuse. But I take the

opportunity of considering the wider question.

26 When may a solicitor change sides? We have a decision of Lord Eldon on the

point but unfortunately its basis is not clear. In 1812 Earl Cholmondeley brought a

suit against Lord Clinton to recover great estates in Devon and Cornwall. Seymour

2 Black v. Taylor [1993] 3 N.Z.L.R. 403 at 405 per Cooke, P.

3 Prince Bolkiah v. KPMG [1999] 2 A.C. 222.
4 Farrow Mortgage Services Pty. Ltd. (In liq.) v. Mendall Properties Pty. Ltd. [1995] 1 V.R. 1 per
Hayne, J.

Spincode v. Look Software & Ors 11 BROOKING, J.A.

 and Montriou acted as the solicitors for Lord Clinton in it. After the suit had been on

foot for some time the solicitors dissolved partnership, and in December 1814

Montriou told Lord Clinton he had been appointed as the plaintiffs solicitor. There

was evidence that Montriou had acquired confidential information from Lord

Clifford about the estates. Lord Eldon, after consulting all the judges, laid it down

that a solicitor, not having been discharged by the party for whom he was acting in a

cause but having discharged himself from the relationship of solicitor and client with

that party, was not at liberty to become solicitor for the opposite party in the same

cause. The Lord Chancellors brief reasons say nothing about confidential

information.5 The decision has often been cited. In 18216 Lord Eldon himself said of

it:

There the gentleman who had been concerned for Lord Clinton
discharged himself and went over to the other side. It appeared to
me, and to all the Judges, that nothing could be more dangerous than
to permit a solicitor employed by A. in a cause between him and B., to
leave A. while still willing to retain him, and enter into the service of
B.

Again nothing is said in terms about confidential information. In another case in the

same year7 his Lordship remarked:

The case of Cholmondeley v. Clinton was no more than this.

A gentleman discharged himself from being solicitor for Lord Clinton,
and the question was whether, whether the Court would permit him
to turn his back on his client, and to go into the service of the person
against whom he had been employed.

That passage makes no mention of confidential information, but some months later,

in the same case, the Lord Chancellor referred to Cholmondeley v. Clinton again and

observed that in it there was no doubt much important information that might be

communicated and that the Judges were of opinion that [the solicitor] could not

carry over to the other side the information acquired in the service from which he

had discharged himself.

5 Cholmondeley (Earl) v. Clinton (Lord) (1815) 19 Ves. Jun. 261; 34 E.R. 515.
6 Beer v. Ward (1821) Jac. 77 at 82; 37 E.R. 779.
7 Bricheno v. Thorp (1821) Jac. 300 at 301; 37 E.R. 864.

Spincode v. Look Software & Ors 12 BROOKING, J.A.

27 In the Irish case of Hutchins v. Hutchins8 Sir William McMahon, M.R. appears

to treat Cholmondeley v. Clinton as depending on confidential communications. Lord

Eldons decision was again considered in Johnson v. Marriott9. Understandably,

having regard to the words used by Lord Eldon in Cholmondeley v. Clinton, all three

members of the Court treated that case as dependent upon the solicitors having

been discharged by his own act. That was not what had happened in Johnson v.

Marriott, where the solicitor had been discharged by his client. Gurney, B. said, at

189, I do not mean to say, that, if an attorney conducts himself in such a way as to

procure his discharge, the Court would not restrain him from acting for the other

side, for, in that case, his discharge would be caused by his own act . All three

judgments appear to proceed upon the basis that in such a case communication of

confidential information need not be proved. Griffiths v. Griffiths10 was, like

Cholmondeley v. Clinton, a case in which a firm of solicitors, employed by one party to

a cause, dissolved partnership. It was held by Sir James Wigram, V.C., applying

what had been said in Cholmondeley v. Clinton, that the solicitors had, by dissolving

the partnership, dissolved the relationship of solicitor and client and brought the

retainer to an end. But there the question was, not whether a member of the former

firm was free to act for the other side in the litigation, but whether the retainer had

been brought to an end by the firm or the client for the purpose of the rules

governing the terms on which a client could obtain the papers held by his former

solicitor. Nothing is said about the questions with which we are concerned.

28 Parratt v. Parratt11 is more to the point on the facts, but it still does not help to

clarify what Cholmondeley v. Clinton stands for. A bill filed by the residuary legatees

under a will alleged breaches of trust on the part of the managing executor. The

solicitor for the plaintiffs had for several years been the solicitor for the managing

executor, but that relationship had come to an end some time before, and it had been

8 (1825) 1 Hog. 315.

9 (1833) 2 C. & M. 183; 149 E.R. 725.
10 (1843) 2 Hare 587; 67 E.R. 242.
11 (1848) 2 De G. & Sm. 258; 64 E.R. 116.

Spincode v. Look Software & Ors 13 BROOKING, J.A.

 the client who had brought it to an end. Knight Bruce, V.C. said that one had to have

regard to the circumstances of the case and that the circumstances did not warrant

the grant of an injunction to restrain the solicitor from acting for the plaintiffs. The

Vice-Chancellor observed that this refusal of an injunction was not inconsistent with

Cholmondeley v. Clinton, since in that case it was an ingredient (I do not say that it

was an essential ingredient) that Montriou had acted with Seymour as the solicitor

in the very cause; the Vice-Chancellor also observed that the case before him was

one in which the client had discharged the solicitor and was to be contrasted with

cases in which the solicitor had virtually discharged himself.

29 In Re Holmes; In Re Electric Power Co. Ltd.12 was an application to restrain

Holmes from acting for the petitioners in a winding up on the ground that he had

acted for the company. He had been employed in its incorporation in March 1874

and had attended one or two board meetings, at one of which he was formally

appointed solicitor to the company. His bill relating to the incorporation had been

paid in June 1874 and since that date he had not acted for the company. In March

1876 the company entered into negotiations for a loan with another firm of solicitors,

and in May 1876 Holmes acted as solicitor for a debenture holder on a petition to

wind the company up, which was dismissed by consent; no objection was then

raised by the company to his acting for the petitioner. The pending petition was

presented in February 1877. Hall, V.C. dismissed the application, remarking that the

fact that no objection had been taken to Holmess acting on the earlier winding up

petition showed that the application for an injunction was not bona fide. The Vice-

Chancellor would in any event have dismissed the application on the merits, being

of opinion that the solicitor had not acquired private information of any significance

as a result of his former retainer. He went on to refer to authorities which included

Cholmondeley v. Clinton, Beer v. Ward and Parratt v. Parratt and to the fact that in the

first and third of these cases the solicitor had discharged himself. Five years later, in

Little v. Kingswood Colleries Co.13 Hall, V.C. restrained a solicitor from acting against

12 (1877) 25 W.R. 603.

13 (1882) 20 Ch. D. 733.

Spincode v. Look Software & Ors 14 BROOKING, J.A.

 his former client. What is said in that judgment must be read subject to what took

place when the case reached the Court of Appeal. My present concern is not with

the breadth of the view taken by Hall, V.C. but with his opinion about the basis of

Cholmondeley v. Clinton. The Vice-Chancellor noted that Cholmondeley v. Clinton had

been referred to by Lord Cottenham, L.C. in Dietrichsen v. Cabburn14 (not a case of

seeking to have a solicitor restrained) as an example of the equitable jurisdiction to

restrain by injunction an act which the defendant by contract or duty was bound to

abstain from.

30 Finally I mention what was for many years the leading case on when an

injunction would be granted to restrain a solicitor from disclosing confidential

information imparted by a client, Rakusen v. Ellis, Munday and Clarke15. At 837

Cozens-Hardy, M.R. said of Cholmondeley v. Clinton:

I have read and re-read that case, and in my opinion it lays down no
such principle. It was, as explained by Lord Eldon in a subsequent
case, Bricheno v. Thorp, a case in which a solicitor, one of the members
of the firm, in the middle of a litigation discharged himself and went
over to the other side. It was a question of breach of contract and not
merely a breach of duty, and Lord Eldon and the judges he consulted
really decided that case on a ground which is not now treated by
counsel on either side, and I think is properly not treated by them, as
conclusive of the matter. Lord Eldon proceeded on the footing that
the solicitor could not by discharging himself in the middle of a suit
deprive the client of the right which he had by the contract of retainer
to the services of that solicitor. (Footnote omitted.)

This seems to suggest that the fact that the solicitor had discharged himself was

relevant but not conclusive. The Master of the Rolls evidently viewed as the breach

of contract the solicitors failure to continue to serve Lord Clinton, not his

commencing to act for the Earl (in breach of an implied term of his contract with

Lord Clinton). The second member of the Court, Fletcher Moulton, L.J., remarked, at

841-2, that Cholmondeley v. Clinton must be read with the authoritative explanations

of it given by Lord Eldon in Beer v. Ward and Bricheno v. Thorp. The third judge,
Buckley, L.J., said, at 844, that a careful reading of Cholmondeley v. Clinton showed

14 (1846) 2 Ph. 52; 41 E.R. 861.

15 [1912] 1 Ch. 831.

Spincode v. Look Software & Ors 15 BROOKING, J.A.

 that Lord Eldon and the judges whom he consulted were basing themselves on the

fact that the solicitor had discharged himself and was going into the service of the

opposing litigant. His Lordship continued

and they, I think, drew the inference that having discharged himself
he was going into the employment of a new client with the result, or
the possible result, or the anticipated result, that there would be a
breach of the confidential duties which he owed to his former client.
Of course he owes his former client the duty not to disclose that which
he has learned confidentially .

This seems to treat Cholmondeley as dependent upon the apprehended use of

confidential information.

31 One cannot say with confidence what Lord Eldon and the judges whose

opinion he took were intending to lay down in Cholmondeley v. Clinton. In particular,

it is not possible to say with confidence what the significance was thought to be of

the solicitors having discharged themselves or whether Cholmondeley v. Clinton, at all

events as subsequently explained by Lord Eldon, is to be regarded as based on the

danger of the misuse of confidential information16.

32 Since the earliest days of attempts to prevent solicitors from acting against

their former clients it has been recognised that a basis I use the indefinite article

advisedly of the jurisdiction is that which the court has over solicitors as its

officers. Sir Samuel Romilly, for Lord Clinton, said that there were two heads of

jurisdiction: irreparable injury which supports an injunction and in addition the

general jurisdiction over an officer of the Court. In Beer v. Ward motion was made in

the suit for an injunction restraining the solicitor. Lord Eldon dealt with the

application on its merits while observing that objection might have been taken to the

form of the proceeding on the ground that, being an application to the general

jurisdiction of the Court over its officers, it ought to have been made in the matter of

16 Finn, Fiduciary Obligations, p.139, in a passage cited in Fruehauf Finance Corporation Pty. Ltd.
v. Feez Ruthning [1991] 1 Qd.R. 558 at 570, treats Cholmondeley v. Clinton as not depending on
confidential information and derives from it a rule that the courts will restrain a solicitor if
he discharges himself for the purpose of acting for the opponent. Finns views on the duty
of loyalty will be discussed later.

Spincode v. Look Software & Ors 16 BROOKING, J.A.

 the complainant, not by motion in the cause. In Davies v. Clough17 Sir Lancelot

Shadwell, V.C. said:

The cases appear to afford this general principle, namely, that all
Courts may exercise an authority over their own officers as to the
propriety of their behaviour; for applications have been repeatedly
made to restrain solicitors who had acted on one side from acting on
the other, and those applications have failed or succeeded upon their
own particular grounds, but never because the Court had no
jurisdiction.

In that case the application was made by motion in the suit and the order sought was

one restraining the plaintiffs from employing the solicitors. What had been said by

Lord Eldon on the question of procedure in Beer v. Ward was discussed by Sir

Michael OLoghlen, M.R. in the Irish case of Biggs v. Head18. The Master of the Rolls

thought that the jurisdiction which the Court possessed over solicitors could be

exercised on an application made in the existing cause and pointed out that if

application was made in the cause the Court was able to enjoin not only the solicitor

but also the client. In Rakusen v. Ellis, Munday and Clarke, Cozens-Hardy, M.R., at

835, spoke of the special jurisdiction over solicitors, Fletcher-Moulton, L.J., at 841,

referred to the power that we certainly possess of directing what the officers of the

Court should and should not do and Buckley, L.J., at 843, referred to the jurisdiction

over solicitors as officers of the Court. Buckley, L.J. at 842, noted that at times an

injunction was sought against both the new client and the solicitor while at other

times the injunction was asked for only against the solicitor19.

33 The Full Court of Queensland, in Mills v. Day Dawn Bloch Gold Mining Co.

17 (1837) 8 Sim. 262; 59 E.R. 105. The decision was affirmed by Lord Cottenham, L.C.
18 (1837) Sau. & Sc. 335 at 357-8.
19 In re Holmes; In re Electric Power Co. Ltd. (1877) 25 W.R. 603 is an example of an application
made in the matter of the solicitor coupled with a motion made in the existing proceeding. It
would be possible, but tedious and unprofitable, to deal with numerous cases one by one,
noting those in which an application was made in the matter of the solicitor, those in which
an application was made in the existing proceeding, those in which an action or other
originating proceeding was launched claiming an injunction and those in which two
procedures were employed. And one could catalogue the cases in which an injunction was
sought against the client, those in which an injunction was asked for against the solicitor and
those in which both were sought to be enjoined. But this would be a barren exercise. No
modern court would be constrained in its grant of a remedy by the form of the proceeding in
a matter of this kind.

Spincode v. Look Software & Ors 17 BROOKING, J.A.

 Ltd.20, said that the jurisdiction rested on the power of the Court to keep control over

all its officers and that in an appropriate case both the solicitor and the new client

could be restrained. Further authority recognising the power of the court over its

officers as a basis of the jurisdiction to restrain solicitors from acting against the

former client will be found in Black v. Taylor21; Kooky Garments Pty. Ltd. v. Charlton22;

Macquarie Bank Ltd. v. Myer23; Grimwade v. Meagher24; World Medical Manufacturing

Corporation v. Phillips Ormonde & Fitzpatrick Lawyers25.

34 According to Finn, Fiduciary Obligations, p.139:

The courts will restrain a solicitor if he discharges himself for the

purpose of acting for the opponent.

But otherwise the courts will only restrain a solicitor from acting for
the opponent or against a former client if he actually discloses the
secrets of his former client of (sic) if in the circumstances of a
particular case that mischief is rightly anticipated. (Footnotes
omitted.)

The authorities cited for the first proposition include Cholmondeley v. Clinton. The

passage treats Cholmondeley v. Clinton as not dependent upon the danger of the

communication of confidential information.

35 In 1999 the House of Lords rejected the suggestion that a former client could

prevent a solicitor from acting for another by invoking something other than the

need to protect confidential information. In the leading speech Lord Millett said this:

In Rakusens case the Court of Appeal founded the jurisdiction on the

right of the former client to the protection of his confidential
information. This was challenged by counsel for Prince Jefri, who
contended for an absolute rule, such as that adopted in the United
States, which precludes a solicitor or his firm altogether from acting
for a client with an interest adverse to that of the former client in the
same or a connected matter. In the course of argument, however, he

20 (1882) 1 Q.L.J. 62 at 63.

21 [1993] 3 N.Z.L.R. 403.
22 [1994] 1 N.Z.L.R. 587.
23 [1994] 1 V.R. 350 per Marks, J. at 351-2.
24 [1995] 1 V.R. 446.
25 [2000] VSC 196 at [88].

Spincode v. Look Software & Ors 18 BROOKING, J.A.

 modified his position, accepting that there was no ground on which
the court could properly intervene unless two conditions were
satisfied: (i) that the solicitor was in possession of information which
was confidential to the former client and (ii) that such information was
or might be relevant to the matter on which he was instructed by the
second client. This makes the possession of relevant confidential
information the test of what is comprehended within the expression
the same or a connected matter. On this footing the courts
intervention is founded not on the avoidance of any perception of
possible impropriety but on the protection of confidential information.

My Lords, I would affirm this as the basis of the courts jurisdiction to

intervene on behalf of a former client. It is otherwise where the
courts intervention is sought by an existing client, for a fiduciary
cannot act at the same time both for and against the same client, and
his firm is in no better position. A man cannot without the consent of
both clients act for one client while his partner is acting for another in
the opposite interest. His disqualification has nothing to do with the
confidentiality of client information. It is based on the inescapable
conflict of interest26 which is inherent in the situation.

Where the courts intervention is sought by a former client, however,

the position is entirely different. The courts 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 retainer. 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 client relationship is a continuing duty to preserve
the confidentiality of information imparted during its subsistence.27

36 What Lord Millett said about the inability of a solicitor to act at the same time

both for and against the same person reflected the view expressed by Staughton, L.J.

in Re a Firm of Solicitors28.

37 In Bolkiah the House of Lords disposed of the question whether a basis could

26 This plainly means conflict between the interests of the two clients. But in view of the fact
that conflict of interest is ordinarily used to describe a clash between the interest of the
fiduciary and the duty owed to the client, it seems preferable, with respect, to speak in the
present connection, as Professor Finn and a number of other learned authors do, of conflict of
duty with duty. Compare the reference to competing duties in Pilmer v. Duke Group Ltd. (In
Liq.) (2001) 75 A.L.J.R. 1067 at [77]-[78].
27 Prince Bolkiah v. KPMG [1999] 2 A.C. 222 at 234-5.
28 [1992] Q.B. 959 at 972.

Spincode v. Look Software & Ors 19 BROOKING, J.A.

 be found for restraining a solicitor from acting against a former client other than the

protection of confidential information without discussing it at any length. Quite

apart from decisions in the United States there is and was a considerable body of

authority bearing on that question. I have already drawn attention to some of the

many cases which accept that, where a solicitor is an officer of the court, the

jurisdiction of the court to restrain the solicitor from acting may be founded not only

on the general power which a court exercising equitable jurisdiction has to grant

injunctions for the protection of a right but also on the control which a court may

exercise over its own officers. Lord Eldon himself was one of the first to speak of this

other jurisdiction, and he seems to have been the first to raise the procedural

question whether it could be exercised in a cause, in the absence of objection from

the solicitor to a defect in the procedure. It may be argued that the existence of the

special jurisdiction over officers of the court is not inconsistent with the view that the

only basis on which that jurisdiction will be exercised is the existence of a right to

prevent the misuse of confidential information. On the other hand, it may be said

that the nature and object of the jurisdiction exercised over officers of the court are

such as to prevent its being so confined.

38 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. I have

already discussed what was said by Lord Eldon in Cholmondeley v. Clinton and what

has been later said about that case. In 1837 Sir Lancelot Shadwell, V.C. spoke of this

general principle, namely, that all Courts may exercise an authority over their own

officers as to the propriety of their behaviour29. Decisions cited by the Vice-Chancellor

included Cholmondeley v. Clinton, Beer v. Ward and Bricheno v. Thorp. The application

was made to Shadwell, V.C. on motion in the suit and the injunction granted was not

against the solicitor but against the new clients.30 There was evidence that

29 Davies v. Clough (1837) 8 Sim. 262; 59 E.R. 105. (My emphasis.)

30 This is an early example of successful invocation of the special jurisdiction over solicitors on
an application made in the cause itself.

Spincode v. Look Software & Ors 20 BROOKING, J.A.

 Mrs Clough herself had imparted confidential information to the solicitors, but it is

not clear whether the Vice-Chancellor regarded that as essential to the grant of relief.

For he said, at 267:

The question to be considered is whether he ought to be permitted to

act as the solicitor of the Plaintiffs in this suit, the object of which is to
set aside that very transaction which was brought to maturity by
himself, when he was acting as the solicitor of Mrs Clough.

39 Interesting decisions from New Zealand and Canada were not discussed by

the House of Lords in Prince Bolkiah v. KPMG. Black v. Taylor31 is a decision of the

Court of Appeal of New Zealand. N.A. Taylor had sued the estate of his late uncle,

J.B. Taylor, for breach of a contract or promise to leave property by will. The Court

of Appeal upheld a declaration a change from the usual injunction and the only

example I have noticed that a practitioner should not act further as counsel for the

defendants. He had for decades acted as solicitor or counsel or both to members of

the Taylor family, including the plaintiffs uncle and at times the plaintiff himself. In

upholding the declaration the Court founded itself on the inherent jurisdiction of the

court to control its own processes and so prevent a practitioner from acting in

relation to litigation in a way which would cause reasonable members of the

community to lose confidence in the judicial system. Shortly after that decision was

given a judge of the High Court of New Zealand, Thomas, J., similarly rested his

judgment on the principle of protecting the integrity of the judicial process.32 In

Black v. Taylor Richardson, J. referred to Canadian decisions33 on whether an

appearance of impropriety could justify restraining a practitioner from acting in

litigation.

40 The two New Zealand decisions were considered by Mandie, J. in Grimwade v.

Meagher34. His Honour adopted statements of principle in them and restrained

counsel from acting for the plaintiffs in a proceeding in order, as he said at 455, to

31 [1993] 3 N.Z.L.R. 403.

32 Kooky Garments Ltd. v. Charlton [1994] 1 N.Z.L.R. 587.
33 In particular, Everingham v. Ontario (1992) 88 D.L.R. (4th) 755.
34 [1995] 1 V.R. 446.

Spincode v. Look Software & Ors 21 BROOKING, J.A.

 ensure the due administration of justice and to protect the integrity of the judicial

process and in order not only that justice be done but be manifestly and undoubtedly

be seen to be done. Mandie, J. considered that a fair-minded, reasonably informed

member of the public would conclude that the proper administration of justice

required that the counsel concerned be prevented from appearing in the action

because of real risks of lack of objectivity and of conflict of interest and duty.

41 The need for justice to appear to be done and the likely impressions of a

properly informed and reasonable observer where a lawyer changes sides have been

mentioned time and again in the cases. Bryson, J. of the Supreme Court of New

South Wales has said that the spectacle or the appearance that a lawyer can readily

change sides is very subversive of the appearance that justice is being done.35

42 Duty of loyalty is a phrase used in recent years by judges and others in

discussing whether a solicitor who acts or has acted for one client may be prevented

from acting for another.36 The currency of the expression in this connection is

35 D & J Constructions Pty. Ltd. v. Head (1987) 9 N.S.W.L.R. 118 at 123. See too, for example,
Fruehauf Finance Corporation Pty. Ltd. v. Feez Ruthning [1991] 1 Qd.R. 558 at 566; Wan v.
McDonald (1991) 33 F.C.R. 491 at 513-4; Carindale Country Club Estate Pty. Ltd. v. Astill (1993)
115 A.L.R. 112; McVeigh v. Linen House [1999] 3 V.R. 394 at 398; Westend Entertainment Centre
Pty. Ltd. v. Equity Trustees Ltd. [1999] VSC 514 at [27]; World Medical Manufacturing Corporation
v. Phillips Ormonde & Fitzpatrick Lawyers [2000] VSC 196 at [87] and [88].
36 References to a solicitors duty of loyalty will be found, for example, in Farrington v. Rowe
McBride & Partners [1985] 1 N.Z.L.R. 83 at 90 (A solicitors loyalty to his client must be
undivided), Wan v. McDonald (1991) 33 F.C.R. 491 at 513 per Burchett, J. (cited, for instance,
by Drummond, J. in Carindale Country Club Estate Pty. Ltd. v. Astill (1993) 115 A.L.R. at 117 and
by J.D. Phillips, J. in Holdsworth v. M.R. Anderson & Associates Pty. Ltd., unreported, 26 August
1994, at p.23), McVeigh v. Linen House Pty. Ltd. [1999] 3 V.R. 394 at 398 per Batt, J.A. and
Westend Entertainment Centre Pty. Ltd. v. Equity Trustees Ltd. [1999] VSC 514 at [27] per
Mandie, J. Some years ago now the trustees duty of loyalty was made the subject of an
article by Professor McLean in (1968-69) 7 Alberta L.R. 218. But the notion can be found even
earlier. In 1928 Cardozo, C.J. spoke of the rule of undivided loyalty affecting those bound by
fiduciary ties: Meinhard v. Salmon 249 NY 458 at 464; 164 NE 545. And in 1939, in the first
edition of his Law of Trusts, section 170, Professor Scott described the duty of loyalty as the
most fundamental duty of a fiduciary. So does Bogert, Law of Trusts and Trustees, 2nd ed.
revised, pp.217 and 250. Parkinson, Principles of Equity, pp.327 and 353 speaks of the
solicitors duty of loyalty. Ford, Principles of the Law of Trusts, para. 9010, describes undivided
loyalty as the fundamental duty of all fiduciaries, and it seems to me that Finn would agree
with that characterisation. In Bristol and West Building Society v. Mothew [1998] Ch.1 at 18
Millett, L.J., as his Lordship then was, described the obligation of loyalty as the distinguishing
obligation of a fiduciary. Kirby, J. has accepted Finns description of a duty of loyalty:
Pilmer v. Duke Group Ltd. (In Liq.) (2001) 75 A.L.J.R. 1067 at [136] (his Honour dissented as to
the proper outcome of the litigation).

Spincode v. Look Software & Ors 22 BROOKING, J.A.

 undoubtedly the result, at least in part, of the writings, before his appointment to the

Bench, of Professor Finn. I have not noticed any reference to a duty of loyalty in his

work Fiduciary Obligations (1977), although Chapter 22, headed Conflict of Duty and

Duty, begins with the words To ensure a loyalty which is undivided . Writing

in 1988, Professor Finn said that the fiduciary standard enjoined one party to act in

the interests of the other to act selflessly and with undivided loyalty. Later in the

same paper he described the fiduciary principle as insisting upon a fine loyalty in the

service of the interests of another37. Chapters 21 and 22 of a fairly recent work on

lawyers38 are entitled Duties of Loyalty, while Chapter 12 of a very recent book on

lawyers39 is headed Conflict of Interest: Loyalty. Professor Finn considers at some

length in a later paper40 questions which arise when solicitors or other fiduciaries act

either in same-matter conflicts (where the fiduciary acts in the same matter for

different parties having adverse interests in it) and former-client conflicts, where a

solicitor or other fiduciary, having acted for a client in a particular matter, later acts

against that client in the same or a related matter. Near the outset of the discussion

of same-matter conflicts41 this is said:

These are in the very heartland of fiduciary law, though English law
in contrast with some Commonwealth jurisdictions (particularly
Canada and New Zealand) has been slow to appreciate the full
significance of this. The agent or adviser acting for two parties with
adverse interests in the same matter not only owes each party those
common law duties of care, skill, and the like appropriate to the
function assumed, he also owes each a duty of loyalty. We are only
now beginning to appreciate how much the latter can overshadow the
former in importance.

Loyaltys effect is twofold. First, if the fiduciary is being remunerated

by either or both of the parties, the conflict of duty interest theme in
the fiduciarys obligation requires him to disclose to each client that
he is being remunerated by the other. Secondly, much more
importantly, until each client agrees to the contrary, or unless there is

37 The Fiduciary Principle, in Equity, Fiduciaries and Trusts, ed. Youdan, p.1 at pp.4 and 27.
38 Disney & Ors, Lawyers, 2nd ed.
39 Ross, Ethics in Law, 3rd ed.
40 Fiduciary Law and the Modern Commercial World, Commercial Aspects of Trusts and
Fiduciary Obligations, ed. McKendrick (1992).
41 At p.24.

Spincode v. Look Software & Ors 23 BROOKING, J.A.

 a legally acknowledged custom to the contrary, each client is entitled
to, and is entitled to assume that he has, the undivided loyalty of the
fiduciary he has engaged. The rule here is simple and inexorable:
Fully informed consent apart, an agent cannot lawfully place himself
in a position in which he owes a duty to another which is inconsistent
with his duty to his principal. (Footnotes omitted.)

This paper was given in 1991. In a paper delivered in 198742 the learned author

frequently refers to a fiduciarys duty of loyalty. The 1987 paper, like so much of

Professor Finns work, has proved influential43.

43 In Wan v. McDonald44 Burchett, J., having referred to a solicitors duty to

safeguard confidential information of his client, continued:

But there are at least two other aspects of the problem to which
attention has more recently been drawn; a solicitors duty of loyalty,
which cannot be treated as extinguished by the mere termination of
the period of his retainer, and the important consideration of public
policy which gives a special quality to the relationship of solicitor and
client that the law will not generally permit to be stained by the
appearance of disloyalty.

It is obvious that, at least in the application of these principles to

particular circumstances, there is likely to be a great difference
between cases such as Rakusen and D & J Constructions, on the one
hand, and cases, on the other, where the one solicitor, having acted
for both parties, seeks to act against one of his former clients, and in
the interest of a preferred client, in litigation arising out of the very
matter in which he himself acted for both. In my opinion, it could
only be in a rare and very special case of this latter kind that a
solicitor could properly be permitted to act against his former client,
whether or not any real question of the use of confidential
information could arise.

44 In his paper given in 1987,45 some years before the decision of the House of

Lords in Prince Bolkiah v. KPMG, Professor Finn made an interesting suggestion. I

quote at some length from pp.15-16 of the paper:

42 Conflicts of Interest The Businessman and the Professional, Seminar on Professional

Responsibility, University of Auckland, 28-29 May 1987.
43 It was referred to by Burchett, J. in Wan v. McDonald (1991) 33 F.C.R. 491 at 512-3, by
Gummow, J. in National Mutual Holdings Pty. Ltd. v. Sentry Corporation (1989) 22 F.C.R. 209 at
229-30 and by Lee, J. in Fruehauf Finance Corporation Pty. Ltd. v. Feez Ruthning [1991 1 Qd.R. 558
at 564.
44 (1991) 33 F.C.R. 491 at 513.
45 Seminar on Professional Responsibility, University of Auckland, 28-29 May 1987.

Spincode v. Look Software & Ors 24 BROOKING, J.A.

 Beneficiary protection apart, another more subtle purpose seems also
to be at work in the conduct regulation of at least some types of
fiduciary. This warrants emphasis. In some spheres conduct
regulation would appear to be becoming an end in itself and this
because there can be a public interest in reassuring the community
not merely beneficiaries that even the appearance of improper
behaviour will not be tolerated. The emphasis here seems, in part at
least, to be the maintenance of the publics acceptance of, and of the
credibility of, important institutions in society which render fiduciary
services to the public.

We encounter often enough the observation that fiduciary duties are

more intense in some relationships than in others. We likewise are
familiar with the notion that the courts will exact from court officers
standards more stringent than those imposed on others. Often the
intensity observation merely signifies that the opportunity for
impropriety is the greater with some types of fiduciary than with
others and that supervision will therefor be the more vigilant. But in
some instances, as also with court officers, the law is, I suggest, in fact
committed to imposing standards of behaviour more severe than is
usual with the ordinary run of fiduciary and, I propose, for the
public interest reason I mentioned earlier.

I have laboured this point because it seems to me to be at the heart of

the controversy over when lawyers in particular can act against
former clients. I will later suggest that the public interest may be a
factor which may dissuade courts from too ready an acceptance of
Chinese Wall defences in legal and financial institutions and this
because an apprehended community scepticism about the efficacy of
such devices may lead to an erosion of public confidence in such
institutions. But I would like for a moment to dwell on the lawyer
acting against a former client.

It is well known that lawyers, like all professionals, are subject to a

legal and not merely an ethical duty to maintain the secrecy of
information acquired fromm or about their clients when acting in
their professional capacity. This duty knows limited exceptions, that
alone of note for present purposes being that information so acquired
cannot be used or disclosed without the clients consent. The duty,
furthermore, is one which subsists after the termination of the
professional-client relationship. It has traditionally been considered
that it is this duty, primarily, which sets the limits to when a lawyer
can act against a former client. The difficulty lies in determining how
that duty should be applied in favour of clients and against lawyers.
(Footnotes omitted.)

There is a footnote to the word primarily in the second last sentence of this

passage:

Spincode v. Look Software & Ors 25 BROOKING, J.A.

 An aspect of the fiduciarys duty of loyalty would seem to have some
part to play where a solicitor discharges himself from a retainer and
then acts against his former client: see Cholmondeley v. Lord Clinton
(1815) 19 Ves. 261; 34 E.R. 515.

45 I have little doubt that the learned author, in speaking in this footnote of the

fiduciarys duty of loyalty, was not thinking in terms, or in terms only, of a

continuing duty, after termination of the retainer, not to misuse confidential

information.

46 In his 1987 paper Professor Finn is particularly concerned with what he calls

the duty of loyalty, an expression which recurs throughout it. At p.13 it is the duty

of loyalty which is treated either as giving rise to or as another way of stating the

conflict of duty and duty rule. This is enlarged on by the author at pp.24-25, where

he speaks of fiduciary duties of disinterest and of loyalty. The duty of disinterest

is either equated with or treated as giving rise to the conflict of duty and interest

rule. The duty of loyalty, or of undivided loyalty, is said to be or to find its

expression in a quite distinct fiduciary duty, quite distinct, that is, from the duty of

disinterest46. The entitlement to the undivided loyalty of a fiduciary whom one has

retained is said to find its expression in a duty not to place oneself in a position in

which the fiduciary owes a duty to a client which is inconsistent with the duty owed

to another client. It is, as I have said, with the fiduciarys duty of loyalty that the

paper is mainly concerned. The conflict of duty and duty rule is discussed in

relation to two situations, between which the distinction is first drawn at pp.23-24.

The first is where the fiduciary acts for two unrelated beneficiaries in the same

matter where the interests of the two are, or are potentially, adverse. This the author

46 The drawing of this distinction may be compared with what the same author said in his paper
on The Fiduciary Principle earlier mentioned, with its references to acting selflessly and
with undivided loyalty and to a fine loyalty in the service of the interests of another. As I
have earlier said, I doubt whether Professor Finn would quarrel with the statements I have
cited that the duty of loyalty is the most fundamental duty of a fiduciary. In those statements
the duty of loyalty is a very wide conception. In this wide sense it underlies or finds in part
its embodiment in the duty of disinterest the conflict of duty and interest rule. At times
Professor Finn, in concentrating attention on the conflict of duty and duty rule, uses loyalty
in a narrower sense than, for example, Cardozo, Scott and Ford, and treats it simply as that
which is embodied in the conflict of duty and duty rule.

Spincode v. Look Software & Ors 26 BROOKING, J.A.

 calls same matter conflict. The second situation is where the fiduciary, in acting or

having acted for one client in one matter, acquires confidential information which is

relevant to the service the fiduciary is rendering to another beneficiary in a separate

matter separate matter conflict. Same matter conflicts are discussed at pp.24-

29. At p.28 Finn says:

[T]he duty of loyalty is not one concerned as such with the use and
abuse of information. Its concern is with beneficiary loyalty .47

Under the heading Same Matter Conflicts Finn discusses only cases of what, at

p.36, he calls examples of concurrent adverse representation. In other words, he

does not deal with the problem of the fiduciary acting in succession for different

clients in the same or a related matter. His only discussion of the problem of what

might be called successive adverse representation is a tantalisingly brief mention

in the sentence from p.16 of this paper which I cited a little earlier and its appended

footnote. He there says that it has traditionally been considered that it is primarily

the duty to maintain secrecy of information which sets the limits to when a lawyer

can act against a former client, and explains the word primarily by the footnote

already cited, which, in reliance upon Cholmondeley v. Lord Clinton, states that an

aspect of the fiduciarys duty of loyalty would seem to have some part to play where

a solicitor discharges himself from a retainer and then acts against his former client.

This footnote may be compared with the passage I earlier cited from the same

authors work on fiduciary obligations, where it is apparently accepted that

Cholmondeley v. Lord Clinton should be treated as authority for the view that, quite

apart from the matter of possible disclosure of confidential information, a solicitor

will be restrained from acting in the same matter for his former clients opponent if

he discharges himself for the purpose of so acting.

47 It should be noted that in his discussion of the duty of loyalty Finn is in

general not concerned with what are nowadays called perceptions: he founds

47 Like Finn, Ford, Principles of the Law of Trusts, para. 9010, and Parkinson, Principles of Equity,
pp.353-6, deal with the problem of solicitors acting for two clients concurrently or
successively by deriving from a solicitors duty of loyalty an obligation to avoid a conflict
between duty and duty. The phrase conflict of duty and duty has now attained a
considerable currency.

Spincode v. Look Software & Ors 27 BROOKING, J.A.

 himself on the entitlement in equity of a client to the undivided loyalty of the

fiduciary who has been retained. There is nevertheless in addition the suggestion

made at pp.15-16 of the 1987 paper that in some instances, as with court officers, the

law is in fact committed to imposing standards of behaviour more severe than is

usual with the ordinary run of fiduciary by reason of the public interest in the

maintenance of confidence in important institutions in society which render

fiduciary services to the public.48 Finn devoted s.3.2 of the paper delivered in 1991

to Former-client Conflicts. At pp.27-28, dealing with the Australian approach to

whether a solicitor may act first for and then against the same person in the same or

in a significantly related matter, he says:

Issues of public interest and public policy which bear on the

importance to be attributed to maintaining public confidence in the
integrity of the particular type of first-client relationship in question,
have a heavy impact on the protective stance to be taken. In the
context of law firms, for example, the twin needs of creating a lawyer-
client environment in which uninhibited communication can be
fostered by assured information security, and of maintaining public
confidence in the legal system itself, have been made paramount to
the interest of second clients in being able to engage the lawyer of
their choice. The general inference to be drawn from this and it is
one of importance to other professions and businesses is that public
policy is likely to have a variable impact on the treatment given this
type of conflict on an industry by industry basis. What holds for a law
firm might not hold (at least to the same extent or with the same
severity) for accountants.

48 I come now to two judgments of J.D. Phillips, J., the first given as a member of

the Full Court and the second sitting at first instance. From the first, Macquarie Bank

Ltd. v. Myer49, I take but a single sentence (at 359):

Obviously the court will not readily countenance a solicitor who has
acted for one client accepting a retainer from another to act against
that former client in the same matter or in a related matter (although,
as the cases demonstrate, there cannot be said to be any absolute
rule).

This I find extremely difficult to square with the notion that misuse of confidential

48 Compare Finns suggestion in his 1991 paper (p.23, note 102) that the law has on occasion
used the officer of the court notion to enhance lawyer-client obligations.
49 [1994] 1 V.R. 350.

Spincode v. Look Software & Ors 28 BROOKING, J.A.

 information is the only basis on which successive adverse representation will be

checked.

49 The second case is Holdsworth v. M.R. Anderson & Associates Pty. Ltd.50, in

which the facts need not be further recited. It is enough to say that Phillips, J. was

doubtful whether it had been shown that the former clients had disclosed to their

solicitors confidential information which merited protection, but found it

unnecessary to decide the point. For Phillips, J. rejected the view that would, some

four years later, find favour with the House of Lords. He referred to a number of the

cases, from Davies v. Clough to Wan v. McDonald, and described the case before him

as one of solicitors who, having once been engaged for a client to effect some

transaction, were then retained by another to act against the former client in

litigation involving that very same transaction. He continued, at 17-18:

In such a situation, I am strongly disposed to the view that the

solicitor ought not to act, and I do not think that that depends upon
the existence or not of confidences imparted on the earlier occasion
that now merit protection. It seems to me to depend rather upon the
existence of the contract of retainer that was made in the first place,
than upon the existence of confidences disclosed and meriting
protection against misuse.

Consider, for example, the case of a solicitor acting for both vendor
and purchaser, which nowadays (at least in this State) may occur only
after certain safeguards have been put in place, and I refer to Council
of Law Institute of Victoria v. A Solicitor [1993] 1 V.R. 361, especially at
pp.366 to 368 and the reference there to the Solicitors Professional
Conduct and Practice Rules 1984. But suppose the transaction of sale
and purchase goes off for want of payment on the due date, and an
argument develops over the delivery of the purchase price to the
solicitor. There may be nothing confidential about the facts by which
alone that dispute will be resolved, but can it be supposed that the
solicitor, having been retained by both vendor and purchaser to act,
and having accepted that retainer, and having acted, can then act for
one against the other in the resolution of that dispute? It is surely
part of the contract of retainer that the solicitor will use his best
endeavours in the interests of his client and he does not do that by
placing his own particular knowledge of events in which he took part
as the agent of both at the disposal of one to the exclusion of the other.
It is on that basis that I think that (at least in the ordinary case) a court

50 Unreported, 26 August 1994.

Spincode v. Look Software & Ors 29 BROOKING, J.A.

 of equity would restrain the solicitor from acting for either vendor or
purchaser in the dispute between them. Nor do I think that anything
turns on whether that dispute first arose before or after the formal
conclusion of the work which the solicitor had been engaged to
transact on behalf of both.

Later his Honour cited passages from Wan v. McDonald referring to a solicitors duty

of loyalty and observing that the issues of loyalty and propriety loom more large

where a solicitor who has acted for both parties continues to act for one of them after

a conflict has arisen.

50 Finally, there is McVeigh v. Linen House Pty. Ltd.51, a decision of the Court of

Appeal given on applications day. The principles taken by Batt, J.A. from the

authorities were not challenged by counsel resisting the application. Prince Bolkiah v.

KPMG was not cited. Batt, J.A., with whose judgment Callaway, J.A. agreed, said

this, at 398, citing a judgment of Burchett, J. from which I have already quoted:

The authorities establish that a court will restrain a solicitor from

acting for a litigant not only in order to prevent disclosure of
confidences of a client or former client, but also to ensure that the
solicitors duty of loyalty to the former client is respected,
notwithstanding termination of the retainer, and to uphold as a matter
of public policy the special relationship of solicitor and client.

Thus, in Wan v. McDonald (1992) 33 F.C.R. 491 at 512-13 Burchett, J.

said:

The emphasis in the judgments was placed on the solicitors duty to

safeguard confidential information of his client. But there are at least
two other aspects of the problem to which attention has more recently
been drawn; a solicitors duty of loyalty, which cannot be treated as
extinguished by the mere termination of the period of his retainer,
and the important consideration of public policy which gives a special
quality to the relationship of solicitor and client that the law will not
generally permit to be stained by the appearance of disloyalty.

It is obvious that, at least in the application of these principles to

particular circumstances, there is likely to be a great difference
between cases such as Rakusen and D & J Constructions, on the one
hand, and cases, on the other, where the one solicitor, having acted
for both parties, seeks to act against one of his former clients, and in
the interest of a preferred client, in litigation arising out of the very
matter in which he himself acted for both. In my opinion, it could

51 [1999] 3 V.R. 394.

Spincode v. Look Software & Ors 30 BROOKING, J.A.

 only be in a rare and very special case of this latter kind that a
solicitor could properly be permitted to act against his former client,
whether or not any real question of the use of confidential
information could arise.

51 A little later, at 399, Batt, J.A. cited two passages I have already set out from

the judgment of Phillips, J. in Holdsworth v. M.R. Anderson & Associates Pty. Ltd.:

In such a situation I am strongly disposed to the view that the solicitor

ought not to act, and I do not think that that depends upon the
existence or not of confidences imparted on the earlier occasion that
now merit protection. It seems to me to depend rather upon the
existence of the contract of retainer that was made in the first place,
than upon the existence of confidences disclosed and meriting
protection against misuse.

It is surely part of the contract of retainer that the solicitor will use his
best endeavours in the interests of his client and he does not do that
by placing his own particular knowledge of events in which he took
part as the agent of both at the disposal of one to the exclusion of the
other. It is on that basis that I think that (at least in the ordinary case)
a Court of equity would restrain the solicitor from acting for either
vendor or purchaser in the dispute between them. Nor do I think that
anything turns on whether that dispute first arose before or after the
formal conclusion of the work that the solicitor had been engaged to
transact on behalf of both.

52 How, then, do matters stand? I think it must be accepted that Australian law
has diverged from that of England and that the danger of misuse of confidential

information is not the sole touchstone for intervention where a solicitor acts against a

former client. That danger can and usually will warrant intervention, but it is not the

only ground. There are two other possible bases for an interdict. In the first place, it

may be said to be a breach of duty for a solicitor to take up the cudgels against a

former client in the same or a closely related matter. What is the origin of the duty?

What is its content, and, in particular, what is the significance, if any, of the fact if it

be the fact - that the solicitor, in Lord Eldons words, discharged himself before he

went over to the other side? It is of course difficult to consider the origin of a

possible duty without at the same time considering its content.

53 Three possible sources of a relevant duty suggest themselves. The first is that

Spincode v. Look Software & Ors 31 BROOKING, J.A.

 there is an equitable obligation of loyalty, which forbids not only the concurrent

holding of two inconsistent engagements by different clients in the same matter52 but

also the holding of two successive inconsistent engagements. To speak of two

successive inconsistent engagements might be thought to beg the question whether

equity imposes a bar; in the view of the House of Lords there is in this sense no

inconsistency. By inconsistent I mean only that the solicitor who formerly acted

for one client in the same matter now acts in that matter for a client with an interest

adverse to that of the former client. In their Lordships view, the duty of loyalty

largely perishes along with the retainer from which it sprang, the only survivor

being that aspect of the duty which protects confidential information. Once the

retainer has gone the solicitor has no obligation to defend and advance the interests

of his former client53. But what can be drawn from this last proposition? Once the

contract of retainer comes to an end the solicitor does, it is true, cease to have active

duties to perform for the former client. But 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.

54 But if this result cannot be achieved as a matter of equitable obligation why

should not the law impose, and the court enforce, an obligation arising otherwise

than in equity? In the passage earlier cited from Holdsworth v. M.R. Anderson &

Associates Pty. Ltd. Phillips, J. referred to the contract of retainer, and to what might

be said to form part of that contract. A possible approach would be to say that it was

an implied term of the contract of retainer between the solicitors and the company in

the present case that the solicitors would not act against the company in the dispute

in relation to which they had been retained by it.54 But I need not pursue this, since

52 Throughout I comprehend in this a closely related matter.

53 [1999] 2 A.C. 222 at 235.
54 I have in mind, not a term attached by the law as an incident of every contract of retainer
between a solicitor and a client, but a term implied in fact, answering the requirements of BP
Refinery (Westernport) Pty Ltd v. Shire of Hastings (1977) 180 C.L.R. 266 at 282-3.,

Spincode v. Look Software & Ors 32 BROOKING, J.A.

 in my view a negative equitable obligation arose, and it is to this obligation that I

now return.

55 Professor Finn accepts that some fiduciary obligations have an effect enduring

beyond the termination of the fiduciary relationship55. In the first of the cases cited

by Finn, Laskin, J., delivering the judgment of the Supreme Court of Canada, said, at

607:

An examination of the case law in this Court and in the Courts of

other like jurisdictions on the fiduciary duties of directors and senior
officers shows the pervasiveness of a strict ethic in this area of the law.
In my opinion, this ethic disqualifies a director or senior officer from
usurping for himself or diverting to another person or company with
whom or with which he is associated a maturing business opportunity
which his company is actively pursuing; he is also precluded from so
acting even after his resignation where the resignation may fairly be
said to have been prompted or influenced by a wish to acquire for
himself the opportunity sought by the company, or where it was his
position with the company rather than a fresh initiative that led him to
the opportunity which he later acquired.

The second case cited by Finn was one of competition after resignation by a person

held to have been a fiduciary. With the decision of the Supreme Court of Canada

may be compared that of Roskill, J. in Industrial Development Consultants Ltd. v.

Cooley56, another case of a director who disengaged himself from the company being

held liable for breach of fiduciary duty, and that of the Full Court in Green & Anor v.

Bestobell Industries Pty. Ltd.57, yet another case of a fiduciarys being held accountable
despite the termination of the fiduciary relationship.

56 The proposition that fiduciary duties can survive the termination of the

fiduciary relationship is supported by decisions dealing with whether a trustee may

avoid disqualification as a purchaser of trust property by retiring from his fiduciary

office. Lord Eldon thought that a fiduciary could not do this unless he shakes off

55 The Fiduciary Principle, Equity, Fiduciaries and Trusts, ed. Youdan, p.1 at p.2, note 14,
citing Canadian Aero Services v. OMalley, [1974] S.C.R. 592; Hudsons Bay Co. v. McClocklin,
[1986] 5 W.W.R. 29.
56 [1972] 1 W.L.R. 443.
57 [1982] W.A.R. 1.

Spincode v. Look Software & Ors 33 BROOKING, J.A.

 the character altogether; putting himself altogether out of the trust; and not then

without a little more than merely parting with the character58. A trustee who retires

after making arrangements for the impugned transaction cannot escape59. Jacobs, J.

has given this explanation of equitys approach60:

It is my view that the basis of the rule that a trustee cannot retire for
the purpose of effecting a transaction between himself and the trust is
twofold. First, in the ordinary case, the fact that he retires in order to
effect that purpose means that the decision to effect that purpose has
been taken during the period of his trusteeship when he was actually
performing the duties of a trustee; in other words the decision to deal
with the trust is his own. Secondly, the trustee who has been actively
managing the trust has all the advantage of the information and
knowledge which comes to him as trustee and which he should use in
no way for his own benefit, but purely for the benefit of the
beneficiaries.

The first of these two bases is independent of the second. At least in a case like the

present, where the fiduciary terminates the relationship with a view to acting against

the client in the same matter, may it not be said by analogy that, leaving aside

altogether the use of any special information and knowledge that had come to the

fiduciary as such, a fiduciary, who cannot retire in order to escape from the conflict

of duty and interest rule, cannot quit his or her position in order to escape the

conflict of duty and duty rule? I call to mind again what Lord Eldon said in

Cholmondeley v. Clinton and Beer v. Ward.

57 Three other decisions bearing on the survival of the fiduciary duty of loyalty

may be mentioned, two from the United States61 and one from Canada. The first of

these is a relatively early decision of the Court of Appeals for the District of

Columbia, where this was said62:

58 Ex parte James (1803) 8 Ves. Jun. 337 at 348; 32 E.R. 385.

59 Wright v. Morgan [1926] A.C. 788; Holder v. Holder [1968] Ch. 353 at 398.
60 Gould v. OCarroll (1964) N.S.W.R. 803 at 805.
61 Where there is a body of authority dealing with successive representation. See, for example,
Conflicts of Interest in the Legal Profession, (1981) 94 Harvard L.R. 1244, especially at 1315-
34.
62 Gesellschaft fur drahtlose Telegraphie M.B.H. v. Brown 78 F. 2d 410 at 412 (1935).

Spincode v. Look Software & Ors 34 BROOKING, J.A.

 [P]laintiffs claim for attorneys fees is void and unenforceable, since it
is in conflict with the well-established rule of public policy that where
an attorney has acted for a client he cannot thereafter assume a
position hostile to the client concerning the same matter, or use against
the client knowledge or information obtained from him while the
relation existed. (My emphasis.)

The second is a decision of the United States District Court holding that the receipt of

confidential information was not a prerequisite to disqualification63:

[T]he basis for the rule against representing conflicting interests is

broader than the basis for the attorney-client evidentiary privilege.
The evidentiary privilege and the ethical duty not to disclose
confidences both arise from the need to encourage clients to disclose
all possibly pertinent information to their attorneys, and both protect
only the confidential information disclosed. The duty not to represent
conflicting interests, on the other hand, is an outgrowth of the
attorney-client relationship itself, which is confidential, or fiduciary, in
a broader sense. Not only do clients at times disclose confidential
information to their attorneys; they also repose confidence in them.
The privilege is bottomed only on the first of these attributes, the
conflicting-interests rule, on both.

The Canadian case, a decision of the Ontario Court of Appeal, was one in which

confidential information had undoubtedly been imparted. But the words used by

the Court suggest that the fiduciary duty held to survive termination of the retainer

was not confined to a duty not to misuse confidential information64:

If she lied to him, it in no way relieved him of his fiduciary duty

towards her, nor did the fiduciary duty of Mr Lockyer or of
Mr Pinkofsky cease when the services had been terminated.

It was fundamental to her rights that her solicitor respect her

confidences and that he exhibit loyalty to her. A client has every right
to be confident that the solicitor retained will not subsequently take
an adversarial position against the client with respect to the same
subject-matter that he was retained on. That fiduciary duty, as I have
noted, is not terminated when the services rendered have been
completed.

58 If I thought that the solicitors in this case were subject neither to a negative

equitable nor to a negative contractual obligation, I would say that what has been

63 E.F. Hutton & Co. Inc. v. Brown 305 F. Supp. 371 at 394 (1969).
64 Re Regina and Speid (1983) 43 O.R. (2d) 596 at 600.

Spincode v. Look Software & Ors 35 BROOKING, J.A.

 done by them and I would have regard to the whole of their conduct here is so

offensive to common notions of fairness and justice that they should, as officers of

the Court, be brought to heel notwithstanding that they have not (on this hypothesis)

infringed any legal or equitable right. The authorities supporting this approach need

not be mentioned again. It may be that one should refer to this head, rather than that

of misuse of confidential information, the advantage that McPherson + Kelly would

have by reason of their knowledge of such things as the personalities and reactions

of the participants and what changes may have taken place in the past as regards

what Kirton in his diary note called allegiance65. I am not deterred by the

suggestion that, once infringement of legal or equitable rights ceases to mark off

what may be proscribed, solicitors and their would-be clients will be subject to a

great and unfair uncertainty, being unable to say in advance what view the Court

will take. No experienced solicitor of sound judgment would have done what has

been done in this case. And in my view the nature and objectives of the jurisdiction

which the Court exercises over its officers, and the breadth of the discretion, permit

regard to be had, not only to the nature of the dispute before litigation ensued, and

the former retainer, and the new one, but also to the conduct of the solicitors at all

stages. This includes the partisan approach of Kirton when he acted for the

company and his undisclosed attempts to serve Moores interests, the peremptory

and unseemly way in which the solicitors changed sides, their denials that it was the

company which had been their client and the uncandid affidavit of Kirton in which

he tried to give the impression that the company had not been the client. It would,

as they used to say, be pessimi exempli if McPherson + Kelly were not called to

account.

59 I return to the equitable duty of loyalty. McPherson + Kelley were still acting

for the company in the dispute at the time they began acting for Moore and Spincode

in that dispute. But I should be sorry to think, and reluctant to hold, that whether a

solicitors fiduciary duty of loyalty stood in the way of acting against a former client

65 This has been considered more than once in the cases. See, in particular, Black v. Taylor [1993]
3 N.Z.L.R. 403 at 406 per Cooke, P. and at 407-8 and 412 per Richardson, J.

Spincode v. Look Software & Ors 36 BROOKING, J.A.

 in the same matter depended on whether the solicitor had, in Lord Eldons words,

discharged himself. If there is such a requirement, it is met in this case. But I

would deny the existence of the requirement.

60 So far I have not said much about her Honours reasons for decision. But that

is only because Warren, J.s reasoning seems to me, in its essentials, to accord with

the approach which I would adopt of resting the injunction against this firm of

solicitors on three independent bases: first, the danger of misuse of confidential

information; secondly, breach of the fiduciarys duty of loyalty; thirdly, the

desirability of restraining the solicitors as officers of the Court. Her Honours order

should be upheld. Whichever foundation of the jurisdiction one is considering, there

is no discretionary or other consideration which would lead to the conclusion that

the relief sought should not be granted. I do not elaborate on this: I have certainly

turned my mind to it in the light of such arguments as were advanced.

ORMISTON, J.A.:

61 In this matter I have had the very considerable advantage of reading the

judgment of Brooking, J.A. in draft form. In my opinion, essentially for the reasons

he puts forward as necessary for his decision, I would dismiss the appeal. I would

like to have been able to reach a conclusion also on the other aspects raised in his

judgment, especially the principle of fiduciary loyalty and the precise obligation

owed by solicitors to former clients. Those aspects do raise, however, issues only

touched upon in argument and authorities and papers, especially those by Paul Finn,

given when a professor and before his appointment to the Federal Court, which were

not discussed in argument. If I had had the luxury of further time to consider them, I

may have reached agreement with Brooking, J.A. on each of those aspects, but the

case came on urgently and was given an expedited hearing, so that the litigation

proper, involving potentially the winding up of the subject company on the ground

of oppression, could proceed with reasonable expedition. In these circumstances,

having a clear view as to the proper outcome of the appeal, it would not be right to

delay giving judgment, however important the more general issues are.

BROOKING, J.A.
Spincode v. Look Software & Ors 37
ORMISTON, J.A.
62 This was, as Brooking, J.A. has demonstrated, a most obvious case where

information of a confidential kind on many matters pertaining to the company, its

formation and the interests of other parties in that company must have been

disclosed to the appellants solicitors over the years and in particular over the last

few months before the appellant and the other parties fell out. More importantly, the

litigation itself commenced by the appellant raised, and still has the potentiality to

raise, a large number of issues and involve the investigation of many facts connected

with the company in ways which are obvious to a large degree but which may in the

fullness of time be thought, by one party or the other, to be relevant in a way which

cannot presently be predicted. This is inevitable in an oppression application and a

claim to wind a company up on the just and equitable ground, each kind of

proceeding involving almost invariably the widest possible enquiry into the history

and affairs of the subject company. Howsoever one should characterise presently

the information available to the appellants solicitors as confidential, there can be no

doubt that there is a real risk that some information of that kind will be capable of

being used against the respondents in ways which cannot so far be identified.

Whatever be the precise limits of a former solicitors obligations, the risk here is such

that there should never have been any question of the companys former firm acting

for the appellant and the appellant has no basis for complaining that it has been

restrained from using that former firm.

CHERNOV, J.A.:

63 I have had the considerable benefit of reading the draft reasons for judgment

of Brooking, J.A. and, essentially for the reasons there expressed, I agree that the

appeal should be dismissed. His Honours reasons make it abundantly clear that the

solicitors should not continue to act for Spincode in the principal proceeding. As his

Honour makes obvious, the information which they obtained when acting for the

company and its members was confidential to them and the appellant has not

established that there was no risk of its misuse in the context of the potentially wide

ranging ambit of the principal proceeding in which, inter alia, oppression is alleged.
ORMISTON, J.A.
Spincode v. Look Software & Ors 38
CHERNOV, J.A.
 It is not necessary to decide for the purposes of this appeal whether there is an

absolute obligation on solicitors not to act against their former clients in the same or

substantially the same proceeding, although, if I may say so with respect, the learned

judgment of Brooking, J.A. makes a compelling case for such a view.

---

Spincode v. Look Software & Ors 39 CHERNOV, J.A.