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Bano v Rashid [2010] FJHC 273; HBC218.2009 (26 March 2010)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION HBC NO. 218 OF 2009

BETWEEN:

HUSSAN BANO
PLAINTIFF

AND:

MOHAMMED RASHID
FIRST DEFENDANT

AND:

CREDIT CORPORATION (FIJI LIMITED
SECOND DEFENDANT

Mr J Waituruturu with Ms A Lata for the Plaintiff
Mr S Kumar for First Defendant

DECISION

These proceedings were commenced by Writ issued on 23 July 2009 on behalf of the Plaintiff by the law firm Lata Law.

A statement of Defence was filed on 25 August 2009 on behalf of the First Defendant by the law firm Sunil Kumar Esq. (the firm).

In her Statement of Claim the Plaintiff pleads that she purchased a motor vehicle registered number DW952 (the vehicle) under a Bill of Sale dated 26 October 2005 with the Second Defendant in the sum of $6111,51.

The Plaintiff claims that she subsequently entered into an agreement (evidenced by a sale note dated 17 January 2006) with the First Defendant for the sale of the vehicle to the First Defendant in the sum of $8,373.00. The Plaintiff also claimed that it was a term of the agreement that the purchase price would be paid by monthly installments of $250.00 by the First Defendant to the Second Defendant. It is claimed that transfer was not to be effected until the purchase price had been paid in full.

The Plaintiff claims that the First Defendant failed to make any payment and arranged for the vehicle to be transferred into his name. The Plaintiff claims that she was induced to enter into the agreement as a result of false representations made by the First Defendant.

In his Defence the First Defendant states that he is the registered proprietor of the vehicle. He acknowledges that the vehicle has been seized by the Second Defendant and is still in its possession.

The First Defendant pleads that his father sold a piece of land with dwelling house to the Plaintiff for $60,000. He claims that the Plaintiff paid $50,000 in cash and sold the vehicle to the First Defendant for $10,000.00 thereby paying a consideration of $60,000. It is claimed that the First Defendant has been driving and maintaining the vehicle ever since that time.

There are no particulars provided in the Defence as to the contract and/or transfer in respect of the land, no details as to the location of the land or its title particulars and no details as to when the First Defendant became registered as the owner of the vehicle.

In her Reply the Plaintiff denies that the vehicle was part of the consideration for the purchase of land.

It was not disputed that the vehicle was at some stage seized by the Second Defendant. This Court then ordered that the vehicle be returned to the custody of the Plaintiff on strict conditions. Proceedings against the Second Defendant have subsequently been withdrawn. The Plaintiff has paid out and cleared her debt with the Second Defendant.

At an early stage in the proceedings the Plaintiff raised a preliminary issue concerning legal representation of the First Defendant by Mr Sunil Kumar (Kumar). The Plaintiff claimed that Kumar had given her legal advice on issues concerning the vehicle and concerning the liability obligations and rights of the parties under the Bill of Sale. The Plaintiff claimed that since she had disclosed confidential information to Kumar his representation of the First Defendant would result in detriment to her by prejudicing her right to a fair hearing.

The issues are whether Kumar has acted for both parties at the same time or whether Kumar acted first for the Plaintiff and then for the First Defendant. If the latter, does that constitute a breach of the duty that he owed to the Plaintiff as a former client.

This preliminary issue was not the subject of an application by summons. However the parties sought leave to file affidavit material in relation to the issue. As a result the Plaintiff filed an affidavit sworn by Hussan Bano on 18 August 2009 in support of her claim that Kumar should not be acting for the First Defendant. An answering affidavit sworn by Bed Wati Kumar on 24 August 2009 was filed on behalf of Kumar. The Plaintiff filed an affidavit in reply on 16 September 2009.

The hearing of the preliminary issue was fixed for 8 October 2009. On that day there was no appearance by the Plaintiff and the application was relisted for mention on 30 October 2009.

The application was subsequently relisted for mention on 4 December 2009 at the request of the parties. On that day the parties were directed to present oral submissions on 8 February 2010. On that day Counsel for the Plaintiff applied for the hearing date to be vacated. The application was opposed. After hearing Counsel I ordered that the date be vacated, the application be listed for mention on 12 February 2010 and the Plaintiff pay to the First Defendant the sum of $150 as costs thrown away within 14 days.

The hearing of the application took place on 15 February 2010. The parties made detailed submissions in relation to the relevant facts and somewhat less than detailed submissions on both the statutory legal practice Rules and the position at common law.

Although the Plaintiff based her application on what Counsel referred to as a conflict of interest, that conflict could strictly only arise in the event that there was a finding of fact that Kumar or his firm were acting for both the Plaintiff and the First Defendant at the same time and in the same matter.

On the other hand, if the Plaintiff is raising her objection on the basis that she was a former client then the issue is different. The Court will be concerned more with the risk of disclosure of confidential information.

In her affidavit the Plaintiff states that the sale note evidencing the agreement between herself and the First Defendant was prepared by a Mr Rafiq Khan (now deceased) when he was employed as a law clerk by the firm of Messrs Eroni Veretawatini. She stated that she subsequently contacted Rafiq Khan when she became aware that the First Defendant had arranged to transfer the vehicle into his name. By that time Rafiq Khan was employed by the firm.

Although there is no date stated, the Plaintiff claims that she sought advice from Kumar when Rafiq Khan showed Kumar the sale note. She states that she sought and received legal advice from Kumar on the sale note and the Bill of Sale. She does not state over what period the advice was given. She gives no indication about any arrangement as to what fees were to be charged for this retainer. The substance of the advice appears to be stated in paragraph 8 of her affidavit as follows:

"8. That Barrister & Solicitor Mr Sunil Kumar from Sunil Kumar Esquire had advised me that the 2nd Defendant can sell the vehicle under the Bill of Sale since it was under my name and I can institute legal proceedings against the 1st Defendant and recover the mortgage repayments made by me while the vehicle was in possession of the First Defendant."

The Plaintiff claims that she subsequently urged the Second Defendant to repossess the vehicle. It would also appear that pursuant to arrangements made under the agreement between the Plaintiff and the First Defendant, the First Defendant had the use of the vehicle for business purposes from the date of the sale note (17 January 2006) up until the time it was seized by the Second Defendant.

The Plaintiff claims in her affidavit that the First Defendant then retained Kumar who proceeded to correspond with the Second Defendant on the issue of the repossession of the vehicle.

In the answering affidavit, Bed Wati Kumar (the wife of Kumar) denies that any advice was given to the Plaintiff as claimed and denies the contents of paragraph 9. I have some difficulty with the blanket denial of the contents of paragraph 9. If the deponent is denying that Kumar wrote a letter on behalf of the First Defendant to the Second Defendant, the truth of the matter could have been ascertained through the Second Defendant. Unfortunately, proceedings against the Second Defendant were discontinued by notice dated 16 November 2009.

It is not explained by the Plaintiff how she became aware that Kumar had written a letter to the Second Defendant on behalf of the First Defendant. The Plaintiff does claim that she approached Kumar about the letter and that the explanation he gave was "not correct".

The Plaintiff states that any fees that are owed to the firm are owed by her daughter for representation by Kumar in her divorce proceedings.
In paragraph 14 the Plaintiff states:

"14. That I am however concerned that Mr Sunil Kumar by representing the 1st Defendant has acted against my best interests since I was his client prior to the 1st Defendant notwithstanding that he had represented me in my other legal matters. I also have disclosed privileged information which is confidential and I believe he could use his information against me in any case and this would weaken and prejudice my case."

No further details were provided in relation to any of the claims made in that paragraph. It is not clear whether the reference to confidential information was a reference to information concerning the vehicle and issues arising under the agreements with both the Defendants or was a reference to information concerning her unrelated legal matters.

In the answering affidavit, Bed Wati Kumar points out that the firm only commenced practice on and from 23 November 2007 as prior to that date Sunil Kumar was a Resident Magistrate sitting in Labasa.

The Deponent acknowledges that the firm acted for the Plaintiff in two unrelated matters. One was an application under section 169 of the Land Transfer Act Cap 131 and the other matter was a family law matter. Both matters have been finalized and it is claimed that the Plaintiff owes the firm a balance of $675.00 in respect of those files.

Bed Wati Kumar states that an invoice was forwarded to the Plaintiff for that amount together with a letter indicating that payment was required within two weeks in default of which the firm will no longer be acting as her legal practitioner. It is claimed that payment was not made and that as a result the Plaintiff ceased to be a client of the firm with effect from 25 November 2008.

The Deponent states that since she joined the firm on 18 June 2008, at no time has the Plaintiff given any instructions to or spoken with Kumar about the present case.

In her reply affidavit the Plaintiff acknowledges that she gave instructions in respect of her section 169 application some time after 23 November 2007.

The Plaintiff also acknowledges that Kumar provided her with legal representation in both the section 169 application and the family law matter. She points out that the Deponent of Kumar’s answering affidavit was not employed by the firm at the time those legal services were provided to her. The Plaintiff also acknowledges that Kumar appeared on behalf of the Plaintiff’s daughter in a bail matter and wrote letters on property matters to two Banks.

The Plaintiff admits that both the matters in which the firm had acted for her are now finalized. She denies owing any fees. She gives no details of any account that she might have received and/or paid in respect of the work done by the firm in those two matters. It was not suggested that the firm had acted pro bono. The Plaintiff claims that it is her daughter who owes some money to the firm for unpaid fees.

The Plaintiff denies receiving any invoice and presumably any letter accompanying the invoice. The Plaintiff states that Kumar provided legal representation for her daughter’s bail application on 24 February 2009 at Nausori Court. She states that she hired Kumar to appear for her daughter in the bail application. She maintains that she shared knowledge and information about the present mater with Kumar when he acted for her in the other matters.

Having read the affidavits filed by the parties and having considered the submissions by Counsel I set out briefly my findings of fact.

I find that Kumar commenced legal practice under the name Sunil Kumar Esq. on or about 23 November 2007. Some time after that Mr Rafiq Khan commenced employment with the firm. Some time after that the Plaintiff contacted Mr Rafiq Khan and attended at the office of the firm. At some stage Kumar gave advice to the Plaintiff on issues involving the vehicle. There was no account rendered for that advice. At the same time the firm was acting for the Plaintiff in a section 169 application and in family law proceedings. There were no dates provided by either the Plaintiff or Kumar as to when these services were provided but both agreed the services were provided.

An invoice claiming a balance of $675.00 dated 11 November 2008 indicates that the services were provided between April and September 2008. Kumar has also acted for the Plaintiff’s daughter.

From an affidavit sworn by the Plaintiff on 17 July 2009 it is apparent that as at 1 November 2007 the Plaintiff had engaged the services of the law firm known as Rams Law. That firm wrote a letter to the Second Defendant on instructions from the Plaintiff requesting that the vehicle not be seized by the Second Defendant due to a breach of the Bill of Sale by the Plaintiff. The letter states that there were good reasons why the Plaintiff had agreed to the transfer of the vehicle into the name of the First Defendant without the Second Defendant’s consent.

In a letter dated 27 April 2009 the law firm Nands Law (apparently formerly Rams Law) wrote a letter to the Second Defendant, again on instructions from the Plaintiff. The version of events in this second letter is different from the contents in the first letter.

For the purposes of the present application it is clear that the Plaintiff had retained another firm of Solicitors to represent her in the disputes with the Defendants over the vehicle.

The Plaintiff wrote a letter dated 25 March 2009 urging the Second Defendant to seize vehicle which was at that time in the possession of the First Defendant.

I am satisfied that Kumar did give advice to the Plaintiff about issues arising over the vehicle and that the advice was in response to questions raised by the Plaintiff and was given incidentally whilst he was representing the Plaintiff in two other unrelated matters.

Clearly, the advice given by Kumar to the Plaintiff must have been based on information about the matter received from the Plaintiff. Furthermore, I have concluded that information given by the Plaintiff to Kumar when he acted for her in the unrelated matters may also be relevant to the present matter. It is clear Rams Law and then Nands Law and now Lata Law have also represented the interests of the Plaintiff in her dispute with the Defendants in relation to the motor vehicle. I am satisfied that Kumar has never acted for both the Plaintiff and the First Defendant at the same time. However the firm did act for the Plaintiff’s daughter and the First Defendant at the same time but in unrelated matters.

The Legal Practitioners Decree 2009 (the Decree) regulates the legal profession in Fiji. The Schedule to the Decree sets out "Rules of Professional Conduct and Practice". The following Rules are relevant to be present application:

"Chapter 1 – Relations with Clients

1.1. A practitioner shall not abuse the relationship of confidence and trust with a client.

1.2. A party (this is an error and should read "a practitioner") shall not act for more than one party in the same matter without the prior consent of all parties.

1.3. On becoming aware of a conflict of interest between clients a practitioner shall forthwith:

• (a) advise all clients involved in the matter of the situation
  
• (b) continue acting for all clients only with the consent of all clients and only if no actual conflict has occurred
  
• (c) decline to act further for any party where so acting would disadvantage any one or more of the clients.
  

1.4. Information received by a practitioner from or on behalf of a client is confidential and shall not be communicated to others save with the client’s consent or where so required by law.

1.5. Where a practitioner has received information from or on behalf of a client, a practitioner shall not thereafter act for another client in circumstances where the practitioner’s receipt of such information may result in detriment to the first mentioned client."

The Decree came into effect on 22 May 2009. Prior to that date, the Legal Practitioners’ Act 1997 was the legislation regulating the legal profession in Fiji. The Schedule to that Act contained Rules of Professional Conduct and Practice in identical terms to the Rules quoted above.

These rules are deemed to have been made under section 129 of the Decree for the purposes of commencing disciplinary proceedings against legal practitioners in respect of allegations of professional misconduct or unsatisfactory professional conduct.

The principle stated in Rule 1.1 is fundamental to the duty that a legal practitioner owes to the client. It is an obligation that arises during the existence of the fiduciary relationship of solicitor and client and subsists even when that relationship has ended.

Rules 1.2 and 1.3 do not have any application to the present case in view of my earlier findings.

Rule 1.4 flows from Rule 1.1 when it states that information received by a legal practitioner from or on behalf of a client is confidential. That information cannot be communicated to others without the client’s consent or where so required by law.

Rule 1.5 is relevant to the particular circumstances of this application. Where a client has given information to a legal practitioner then that practitioner cannot act for another client when receipt of that information may result in detriment to the former client. A legal practitioner who holds a former client’s information cannot act for a second client if that information might have a detrimental effect on the former client’s position. The Rule appears to distinguish between client information the receipt of which would adversely affect the client and client information the receipt of which would have no adverse effect on the client if a legal practitioner were to act for a subsequent client.

However the present proceedings do not specifically involve any allegation of professional misconduct or inappropriate professional behavior under the Decree. The question here is whether and under what circumstances the Court can or should intervene to prevent a legal practitioner from acting against a former client.

The relevant authorities indicate that the common law has advanced the cause of protecting confidential information disclosed to a legal practitioner by a former client.

A recent authority in England on this subject is the House of Lords decision in Prince Jefri Bolkiah v. KPMG (a firm) [1998] UKHL 52; [1999] 1 All ER 517. Lord Millett delivered the principal judgment on behalf of the House of Lords and noted at page 525.

"The controlling authority in England hitherto has been the decision of the Court of Appeal in Rakusen –v- Ellis Munday and Clerk [1912] UKLawRpCh 47; [1912] 1 Ch 831 ....

The case is authority for two propositions: (i) that there is no absolute rule of law in England that a solicitor may not act in litigation against a former client; and (ii) that the solicitor may be restrained from acting if such a restriction is necessary to avoid a significant risk of the disclosure or misuse of confidential information belonging to the former client."

It should be noted that Bolkiah v KPMG (supra) was concerned with the duties of an accountant. However the accountant conceded that, since it had provided litigation support services to the Plaintiff, it should be treated in the same way as a solicitor.

Lord Millett accepted the proposition at page 526 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 ought to be relevant to the matter on which he was instructed by the second client. ... the court’s intervention is founded not on the avoidance of any perception of possible impropriety but on the protection of confidential information."

His Lordship considered that where the court’s intervention is sought by a former client the court’s jurisdiction is based on the continuing duty to preserve the confidentiality of information imparted during the subsistence of the fiduciary relationship between solicitor and client. That relationship comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend or advance the interests of the former client (supra at page 527).

Lord Millett then goes on to observe at page 527 (para c) that:

"Accordingly, it is incumbent on a Plaintiff who seeks to restrain (her) former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to (her) and to the disclosure of which she has not consented and (ii) that the information is or may be relevant to the new matter in which the interests of the (later) client is or may be adverse to (her) own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. .... Whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case ."

The duty that Lord Millett identified, that is, the duty to preserve the confidentiality of information disclosed by a former client, is the same obligation that forms the basis of the prohibition in Rule 1.5.

Lord Millett then proceeds to explain the extent of the duty to preserve the confidentiality of information disclosed by a former client. He stated at page 527 (para e) that:

"It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. Moreover it is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for (her) benefit. The former client cannot be protected completely from accidental or inadvertent disclosure. But (she) is entitled to prevent (her) former solicitor from exposing (her) to any avoidable risk; and this includes the increased risk of the use of the information to (her) prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information is or may be relevant ."

His Lordship concluded at page 528 (para f) by stating:

"I prefer simply to say that the court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one, and not merely fanciful or theoretical. But it need not be substantial."

And at page 529:

"In my view no solicitor should, without the consent of his former client, accept instructions unless, viewed objectively, his doing so will not increase the risk that information which is confidential to the former client may come into the possession of a party with an adverse interest."

Furthermore, there is recent authority indicating that the principle goes further than this restricted view that rests on confidential information and its possible misuse. The Court of Appeal of the Victorian Supreme Court in Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501 at page 521 para 52 stated:

"... 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 basis for an interdict. In the first place it may be said to be a breach of duty for a solicitor to take up the cadgels against a former client in the same or a closely related matter."

The second basis for intervention is where it may be concluded that the situation "is so offensive to common notions of fairness and justice" that the legal practitioner, should, as an officer of the court, be brought to heal notwithstanding that (he has) not (on the hypothesis) infringed any legal or equitable right. This is based on, amongst other things, the advantage that a legal practitioner may have by reason of his knowledge of such things as the personality and reactions of the former client and what changes may have taken place as regards "allegiances". (supra at page 524).

On this point the Court noted at page 525:

"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 ensured, and the former retainer, and the new one, but also to the conduct of the solicitors at all stages."

In the present application, the finding that I have made concerning the Plaintiff as a former client requesting and receiving advice from Kumar concerning issues about the vehicle whilst she was a client of the firm is central to the question whether the court should intervene to prevent the firm and Kumar from acting for the First Defendant.

On the balance of probabilities I am satisfied that Kumar is in possession of information which is confidential to the Plaintiff. Kumar has admitted acting for her in two matters, albeit unrelated, and I have concluded that he was requested to give advice and did give advice to the Plaintiff concerning issues involving the vehicle. I am satisfied that during the course of the retainer and when she requested advice from Kumar, the Plaintiff disclosed confidential information. I also find as an inescapable inference that at least some of that confidential information is or may be relevant to the matter in which the interests of the First Defendant as the new or present client are adverse to the Plaintiff’s interests as the former client.

I have concluded, as a result, that there is a danger that the information will be misused in the sense that without her consent, the information will be used or allowed to be used otherwise than for her benefit. The Plaintiff is entitled to prevent her former solicitor from exposing her to any avoidable risk including the risk of using that information to her prejudice or disadvantage. The prejudice or disadvantage arises as a result of Kumar accepting instructions to act for another client with an opposing interest in litigation to which the information may be relevant. There is a real risk of misuse of that information.

Furthermore, I am satisfied that Kumar was made aware at the time he gave advice about the vehicle to the Plaintiff that she was in dispute with the First Defendant. I find that for Kumar to subsequently accept instructions from the First Defendant to act in a matter where his former client was the new client’s adversary is sufficiently offensive to the common notions of fairness and justice that Kumar, as an officer of the Court, should be enjoined and accordingly prevented from acting for the First Defendant.

In reaching this conclusion, I do not consider that the Plaintiff’s position in the substantive dispute is more or less meritorious than the First Defendant’s position. The affidavit material filed by the Plaintiff to date reveals inconsistencies which will no doubt be the subject of detailed examination in the course of the substantive hearing.

However in the interests of fairness, justice and transparency, Kumar and his firm cannot under the circumstances continue to act for the First Defendant. The application is granted. The costs of the application are to be costs in the cause.

W D Calanchini
JUDGE

26 March 2010
At Suva