Flanagan v Pioneer Permanent Building Society Ltd
[2002] QSC 346
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- Notable Unreported Decision
- Flanagan v Pioneer Permanent Building Society Ltd[2002] QSC 346
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Flanagan v Pioneer Permanent Building Society Ltd[2002] QSC 346
Flanagan v Pioneer Permanent Building Society Ltd[2002] QSC 346
SUPREME COURT OF QUEENSLAND
Flanagan v Pioneer Permanent Building Society Ltd & Anor [2002] QSC 346 JF Garments (Qld) Pty Ltd & Ors v Pioneer Permanent Building Society Ltd & Ors [2002] QSC 346 | |
PARTIES: | (Applicant) v PIONEER PERMANENT BUILDING SOCIETY LTD (First Respondent) and MACROSSAN & AMIET(a firm) (Second Respondent) JF GARMENTS (QLD) PTY LTD (First Applicant) and JEANETTE MAY FLANAGAN (Second Applicant) and THOMAS FLANAGAN (Third Applicant) v PIONEER PERMANENT BUILDING SOCIETY LTD (First Respondent) and MACROSSAN & AMIET(a firm) (Second Respondent) and BAYCORP ADVANTAGE BUSINESS INFORMATION SERVICES LIMITED (Third Respondent) |
FILE NO: | S57 of 2002 S137 of 2002 |
Trial Division | |
DELIVERED ON: | 22 October 2002 |
DELIVERED AT: | |
HEARING DATE: | 21 October 2002 |
JUDGE: | Dutney J |
ORDERS: |
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CATCHWORDS: | INJUNCTION – LEGAL PRACTITIONERS – Solicitors acting against former client – whether possible use of confidential information AMFM Constructions Pty Ltd v Boreal Holdings Pty Ltd [2001] NSWSC 1091, distinguished Spincode v Look Software [2001] VSCA 248, referred to Prince Jefri Bolkiah v KPMG [1999] 2 AC 222, referred to Fruehauf Finance Corporation v Feez Ruthning [1991] 1 Qd R 558, followed Gillies v Dibbets [2001] QSC 459, followed |
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COUNSEL: | Mr P Land for the Applicants Mr PS Hack SC for the First Respondents Mr JD Batch SC Second Respondents Mr C McKenzie (Solicitor) for the Third Respondent in s 137/2002 |
SOLICITORS: | Wallace & Wallace Solicitors for the Applicants Gilshenan & Luton for the First Respondents Macrossan & Amiet for the Second Respondent Swanwick Murray Roche for the Third Respondent |
[1]There are effectively three applications before me. The first in S 137 of 2002 concerns Pioneer Permanent Building Society who claims to be owed an amount of money by JF Garments (Qld) Pty Ltd and Baycorp Advantage Business Information Services Ltd, a credit information provider. JF Garments (Qld) Pty Ltd seeks injunctive relief having the effect of deleting certain entries from Baycorp’s credit data base.
[2]The second application in S 137 of 2002 and the application in S 57 of 2002 concern JF Garments (Qld) Pty Ltd and Mr and Mrs Flanagan as applicants and Pioneer Permanent and Macrossan & Amiet, a firm of solicitors, as respondents. These two applications seek to restrain Macrossan & Amiet acting for Pioneer Permanent in certain litigation.
[3]The offending entries in the Baycorp data base are under the headings “defaults” and “court judgements”. The first shows an amount of $26,403 owing on an overdraft account as at 18/04/02. Under the item “Latest reason” appears the words “N/avail”. Under “Court Judgements” is a record dated 26/06/02 of a judgement of $12,171 in the Mackay Magistrates Court in M276 of 2002. Both these entries in fact relate to the same account. Pioneer Permanent sued JF Garments (Qld) in M276 of 2002 for the claimed amount of the company’s overdraft. Summary judgement was obtained for that part of the amount claimed as was represented by cheques signed by Mrs Flanagan and the company was given leave to defend in relation to the rest. Subsequently, the company applied for finance and was refused on the basis of the adverse entries in Baycorp’s data base. The existence of the entries is said to inhibit the capacity of the company to remain in business and to fund its defence of the litigation.
[4]The applicant relies on a decision of Young CJ in Equity in AMFM Constructions Pty Ltd v Boreal Holdings Pty Ltd [2001] NSWSC 1091 in which an injunction was granted where a creditor used a credit bureau entry as a means of debt recovery where the amount said to be owing was insufficient to justify the cost of litigation. The facts before Young J were not on all fours with the facts before me. In particular, the plaintiff in the NSW action had attempted to obtain redress from the credit bureau and been rebuffed. Here Baycorp advertises on its web page its willingness to publish, inter alia, the fact that a judgement has been paid in full if it is notified of that fact with supporting evidence and to publish an explanation for any outstanding default entry. The applicant has not attempted to have the matter dealt with in this way although I am told that an affidavit for which leave to read was sought but opposed is is directed to the company’s ignorance of these rights. If there is a satisfactory remedy available and offered by Baycorp it seems to me in the exercise of my discretion that I should be hesitant to enjoin a party who has no real connection with the dispute between the actual protagonists from going about its ordinary business in the ordinary way. If Baycorp failed to honour the advertised commitment things might be different but there is no evidence before me to suggest that the matter cannot be resolved without court intervention. I refuse the first application in the exercise of my discretion.
[5]The second and third applications concern Macrossan & Amiet’s acting for Pioneer Permanent. Some brief history is required. Mrs Flanagan deposes that since about 1969 Macrossan & Amiet have acted for her, her husband, their business or their children in about 15 matters including house sales and purchases, business claims, insurance claims, bad debts, defamation, police matters involving the children and matters involving JF Garments (Qld) Pty Ltd.
[6]In 1999 Mr Ghusn of Macrossan & Amiet acted for Mr & Mrs Flanagan in the sale of the business of JF Garments Pty Ltd to the Flanagan’s son and his girlfriend. This involved financing the transaction through Pioneer Permanent for whom Mr Ghusn also acted and the giving of guarantees by the Flanagans.
[7]In 2001 Pioneer Permanent through Mr Ghusn served a demand for the sum of $261,967.60 on the Flanagan’s pursuant to the guarantees in relation to which he had earlier acted for the Flanagans. This demand became the subject of action S44 of 2002. Macrossan & Amiet originally acted for Pioneer Permanent in relation to this action but ultimately withdrew. They are now being sued in third party proceedings. The basis of the defence to Pioneer Permanent’s claim and the third party proceedings is, in essence, that Mr Ghusn failed to comply with his instructions in relation to the guarantee to the advantage of Pioneer Permanent and disadvantage of the Flanagans. On 6 November 2001 Mr Ghusn wrote to Mrs Flanagan giving advice in relation to the way in which the Flanagan’s should deal with the problems with the business of JF Garments.
[8]The business of JF Garments was taken over by JF Garments (Qld) in 2001and the overdraft allegedly run up by the latter company. Pioneer Permanent commenced proceedings to recover the amount it alleges was due on the overdraft. These are the proceedings in which the Flanagans and JF Garments (Qld) seek to restrain Macrossan & Amiet by application S 137 of 2002. In addition, Mrs Flanagan was sued to recover an embroidery machine in her possession and over which Pioneer Permanent had taken security when the JF Garments business was sold in 2001. This is S 57 of 2002. The claim against Mr & Mrs Flanagan has been finally resolved by an order of the Court. The appeal period has long expired and all that remains outstanding is the assessment of the costs Mr & Mrs Flanagan were ordered to pay.
[9]The applicants submit that Macrossan & Amiet should be restrained from further acting either in S 57 of 2002 or M267 of 2002 for three reasons. These are breach of a fiduciary duty of loyalty to them as clients, misuse of confidential information and public policy. Whether all of these basis are available in Queensland is unclear. The applicants rely primarily on a decision of Brooking JA in Spincode v Look Software [2001] VSCA 248. The respondents in contrast rely on a decision of the House of Lords in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222. This decision which limits the right to an injunction of the type now sought to the misuse of confidential information has met with approval in a number of Australian jurisdictions. In my view, irrespective of what principal is applied the injunction in S 57 of 2002 cannot be sustained. The action in so far as it concerns the present applicants is finished. The assessment of the costs does not involve any issue in which confidential information, client loyalty or public policy can be affected. The only relevant questions are whether the work claimed has been done by the solicitors and if so, whether it is recoverable on a standard assessment or is available only on an indemnity basis. There can be no arguable involvement of confidential information or abuse of the solicitor client relationship involved in such an assessment. I refuse the injunction sought in S 57 of 2002.
[10]The injunction in relation to the magistrates court proceedings is more difficult. In my view, there is some connection between the subject matter of the magistrates court proceedings and the sale and subsequent recovery of the business of JF Garments by the Flanagans in which Macrossan & Amiet either acted or, at least gave advice. The defence both to the action on the guarantee and the magistrates court proceeding have some apparent similarity. Each involves a form of unwilled acts by the Flanagans. The parties are of course related but not identical. Confidential information can in my view include information personal to the client obtained by virtue of the solicitor/client relationship which may be used for the advantage of the subsequent client. For present purposes Prince Jefri is authority for the proposition that it is sufficient if the plaintiff demonstrates that there is a real and not a fanciful risk of disclosure of confidential information though it is not necessary to show that the risk is substantial. More generally the position in Queensland seems to be as discussed by Lee J in Fruehauf Finance Corporation v Feez Ruthning [1991] 1 Qd R 558 where at 570, a passage from Finn, Fiduciary Obligations at 139 was cited with obvious approval. There the author stated:
“There is no rule of law, for example, that a solicitor who has acted in a particular matter for a client, cannot subsequently act in the same matter for his old client’s opponent. 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 an opponent or against a former client if he actually discloses the secrets of his former client or if in the circumstances of a particular case that ‘mischief is rightly anticipated’.
[11]This passage seems to me to put the Queensland position more in step with the decision in Prince Jefri than with the position in Victoria. I am not here persuaded that there was any current retainer between Macrossan & Amiet at the time of commencement of the magistrates court proceedings. The solicitors do not thus fall into the category of having discharged a client for the purpose of acting for another. An injunction therefor only lies if there is a real and not a fanciful risk of misuse of confidential information of whatever category. This approach was adopted also by Helman J in Gilllies v Dibbets [2001] QSC 459 in a passage to which I was referred.
[12]Despite the similarities in the matters to which I have referred the real issue in the magistrates Court proceedings is whether the transactions sued upon by Pioneer Permanent were authorised by JF Garments (Qld) or made unilaterally by an officer of Pioneer Permanent without authority. The similarities between the matters are thus more superficial than substantive. Particulars of the transactions were sought by JF Garments (Qld) but not exhibited to the material before me. I can form no judgement on whether something in the transactions themselves might relate to an aspect of the earlier transactions. In the end the onus is on the applicants to satisfy me of the real risk of impermissible prejudice. They have failed to do so. I am thus compelled to refuse the application.
[13]The orders will be as follows:
In S137 of 2002 the application in relation to the third respondent’s data base is adjourned to a date to be fixed with liberty to apply. I order the applicants to pay the third respondents costs of the application to be assessed on the standard basis. The costs as between the applicants and the first respondents are reserved and I reserve also the question as to who as between the applicants and the first respondent should ultimately bear costs ordered to be paid to the third respondent.
In relation to the applications in S137 of 2002 and S57 of 2002 for injunctions to restrain Macrossan & Amiet from acting for Pioneer Permanent Building Society each application is dismissed and I order the applicants to pay the respondents’ costs of the application to be assessed on the standard basis. Particularly in relation to the application in S137 of 2002 I am not satisfied that the applicants’ application was so unmeritorious as to justify an order for indemnity costs.