[1999] PNGLR 155

PAPUA NEW GUINEA

[national court of justice]

KELLENEY DAVID ELISHA & NINE OTHERS

V

POST PNG LIMITED & THREE OTHERS

waigani: los j
1, 2 June 1999

legal PRACTItiONERS – Solicitor client relationship – Confidential character of relationship higher than former employee of a company – Hence lawyer may not act in a proceeding against former client – Court may not interfere unless mischief is anticipated.

Facts

The defendants raised objections against the plaintiffs retaining Mr Powaseu as their counsel in this matter on the basis that the counsel was at one time retained as lawyer for the first defendant, Post PNG Ltd, and as such he had a:

(a)	lawyer client relationship; and

(b)	an inside knowledge of the first defendants’ operations where he might use to the extent that it would prejudice the defendant’s case.

Held

1.	Evidence led by the defendants has not established the existence of a clear solicitor-client relationship. To establish that relationship, I consider that the length and depth of solicitor-client relationship must be proven. The seniority of the lawyer is also important which would help to establish that the counsel had a long relationship to the extent that he was almost part of the establishment. Only then an objection may be sustained.

2.	The party raising an objection must produce some evidence and establish the relationship and the nature of the relationship and the extent of the relationship. The facts produced in evidence must speak for themselves without the court shifting through any flimsy evidence to determine whether any conflict does exist or may exist or may occur.

3.	On the evidence before me, the relationship alleged, the nature of the relationship and the extent of that relationship have not been established to the Court’s satisfaction. Objection overruled.

Case cited

Rakusen v Ellis Munday & Clark [1912] 1 Ch 831.

Counsel

K Powaseu, for plaintiffs.
K Naru, for defendants.

2 June 1999

Los j. On behalf of the defendants an objection was raised against Mr Powaseu acting as counsel for the plaintiffs. It was submitted that the counsel was at one time employed as lawyer for the first defendant as such he had:

1.	lawyer/client relationship; and

2.	an inside knowledge of the first defendant’s operations which he might use to the extent that it would prejudice the defendants case.

Lawyer/client relationship

The evidence on this was flimsy. The Managing Director’s evidence could give very little assistance. He did not know who Mr Powaseu was other than seeing him on an occasion at the premises of Post PNG, and seeing him once in a Post PNG vehicle. To a question by the defendant’s lawyer if he had known what relationship Mr. Powaseu had with Post PNG, he answered, "I had no idea". He had tried to refer to a report by Kolta KPK & Accountants about payment of certain fees described as legal costs to show that Mr Powaseu was a lawyer.

The second witness Lohia Guba referred to Mr Powaseu as a person engaged to give "advice to former Managing Director".

The evidence by either witness or both have not established a clear solicitor-client relationship. To establish that relationship, I consider that the length and depth of client-solicitor relationship must be proven. The seniority of the lawyer is also important which would help to establish that the counsel had a long relationship to the extent that he was almost part of the establishment. Only then an objection may make sense.

Inner knowledge of operation

The evidence by the witnesses had not established that the counsel had a long association as an employee of the first defendant to the extent he became part of the establishment. The second witness thought that Mr Powaseu was engaged to give advice to Mr Melisha. Beyond that nothing further was known.

In response to my question whether any principles of law or precedent was relied on, Mr Naru referred me to the Professional Conduct Rules 1989. He has relied particularly on sections 1, 10, and 12. Section 1 defines "client" and "lawyer" –

"client" means any person from whom a lawyer accepts instruction;

"lawyer" means a person who has been admitted to practice as a lawyer under the Act;

Section 10 obliges a lawyer to give total and undivided attention to his client. The section therefore proceeds to describe certain situations where a lawyer must avoid where conflict of interests may arise. The section says –

"Conflict of Interest

(1)	Subject to the duty of a lawyer to the court, a lawyer shall give undivided fidelity to his client’s interests, unaffected by –

(a)	any interest of the lawyer; or

(b)	any interest of any other person; or

(c)	the lawyer’s perception of the public interest.

(2)	If a lawyer has any interest in a matter which –

(a)	may conflict with; or

(b)	is adverse to,

the interests of his client, he shall decline to represent or shall withdraw from representing that client.

(3)	If a lawyer has or acquires any interest in a matter and he –

(a)	wishes to accept; or

(b)	has accepted,

instructions from a client, touching on that matter, he shall –

(a)	decline to represent; or

(b)	withdraw from representing,

that client, unless the client is fully informed in writing of the lawyer’s interest in the matter and the client voluntarily assents in writing to the lawyer acting or continuing to act on his behalf.

(4)	A lawyer or a firm of lawyers shall not represent or continue to represent conflicting interests in litigation.

(5)	A lawyer or a firm of lawyers shall only represent or continue to represent two or more parties in any matters, other than litigation if –

(a)	to do so is not likely to prejudice the interests of the client; and

(b)	the client is fully informed of the nature and implications of the conflict; and

(c)	the client voluntarily assents in writing to the lawyer or firm of lawyers acting or continuing to act; and

(d)	in the case of any town in which there are two or more firms of lawyers practicing, the client has declined to place his instruction with another firm.

(6)	A lawyer shall not give advice, other than the advice to secure the services of another lawyer, to a person who is not his client, where he knows the interests of that person are in conflict with or likely to be in conflict with the interests represented by him of his client.

Where a lawyer has accepted instructions from two clients in a matter and a conflict developments between the interests of those client, the lawyer shall immediately inform each of the clients that he has forthwith ceased to act for them and that they each must instruct other lawyers.

(7)	Where –

(a)	a lawyer has represented a client; or

(b)	because of a lawyer’s association with a law firm he has had access to a client’s confidences,

that lawyer shall not thereafter use such information against that client’s interest or for the benefits of any other person.

(9)	If counsel forms the view that there is a conflict of interest between his client and his instructing lawyer, he shall advise that it would be in the client’s interest to instruct another lawyer and such advice shall be given either in writing to the lawyer or at a conference at which both the lawyer and the client are present.

Section 12 requires a lawyer to maintain his independence and warns that this independence may be compromised if his client relates to him in anyway or if he relates to any one in connections with the court. The sections says –

"Independence.

(1)	A lawyer shall not appear in any Court or in any matter where by reasons of his connection with the client, whether that connection be blood relationship, relationship by matrimony or personal relationship, it will be difficult for him to maintain his professional independence.

(2)	A lawyer shall not appear in any court or in any matter where by reason of –

(a)	his connection with the Court or a member thereof; or

(b)	blood relationship; or

(c)	relationship by matrimony; or

(d)	personal relationship,

the impartial administration of justice might appear to be prejudiced.

Mr Powaseu in opposing the objection submitted that nothing that has been produced has proven that he has any conflict of interest or would compromise his independence. He conceded to an extent that he had some connection with Post PNG but that no longer existed. His clients were aware of it and so if there was to be any objection, his clients should object to him acting for them. Strangely however, the objection was raised by the defendants in particular Post PNG. He referred me to an English case to support his argument. The case is Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831. The facts of this case seem to raise more questions about relationship than the facts advanced to support the objection raised before me. In that case the members of a firm – there were two M & C who, had a habit of doing business separately and without any knowledge of each other’s clients. An occasion arose where an ex employee of a company consulted "M" to issue proceedings against that company. "C" not knowing about the consultation, accepted an appointment to act for the company and the firm was named as Solicitors for the company. The person that consulted M, raised an objection and sought an injunction to restrain the firm from acting for the company. The injunction was granted. On appeal however decision reversed.

The appeal court discussed the law against disclosure of secrets by a former employee of a company (or employer). In almost all business there must be persons in confidential relation to the employers. The knowledge the employees acquire during employment is not at their own disposal. An employee leaves but "still has in his breast secrets which are the property of his past employer". Fletcher Moulton LJ said at page 839 –

"The employee is quite free to go into the service of people who may be rivals or opponents of his former master. The law does not say that possession of those secrets shall cripple his work or sterilize it. He may go into employment quite inconsistent with the employment which he had in the past. All that the law says is: You shall not disclose or put at the service of your new employer the secrets that belong to your old employer".

The Lord Justice then compares this to the relationship between a Solicitor and a client. At page 840 he said –

"In the first place the degree of the confidential character of the relation between the client and his solicitor and of the communications made by the client to the solicitor is in the eyes of the law the very highest so high that the solicitor is absolutely privileged and cannot be made to state what passed between him and his client. To that extent the solicitor is made, as it were, a part of his client for the purposes of those communications. The second reason is that the Court is not bound to accept in that case the standard of sensibility which it may feel is all that it can enforce on people in general who are in confidential relations one with the other. It can fix a standard of the behaviour of its own officers which is higher than it would be practicable to exact from persons in other types of confidential relations. I think, therefore, that in deciding the question of what the action of a solicitor may be, although the Courts does not start fundamentally from a different rule, the decisions it gives may be different in many cases from the decisions which it would give were it appealed to in an action between persons who were not in the position of solicitor and client but nevertheless had been in contractual relations involving confidential communications."

He concludes at page 841 –

"As a general rule the Court will not interfere unless there be a case where mischief is rightly anticipated. I do not say that it is necessary to prove that there will be mischief, because that is a thing which you cannot prove, but where there is such a probability of mischief that the Court feels that, in its duty as holding the balance between the high standard or behaviour which it requires of its officers and the practical necessities of life, it ought to interfere and say that a solicitor shall not act. Now in the present case there is an absolute absence of any reasonable probability of any mischief whatever.

His conclusion is same as Hardy M R who at page 835 said –

"I do not doubt for a moment that the circumstances may be such that a solicitor ought not to be allowed to put himself in such a position that, human nature being what it is, he cannot clear his mind from the information which he has confidentially obtained from his former client; but in my view we must treat each of these cases, not as a matter of form, not as a matter to be decided on the mere proof of a former acting for a client, but as a matter of substance, before we allow the special jurisdiction over solicitors to be invoked, we must be satisfied that real mischief and real prejudice will in all human probability result if the solicitor is allowed to act."

No PNG case had been cited to me on the issue either because there has been none on the point or because the objection was not expected. However judging from the Lawyers Rules of Conduct and my understanding of the general principles of ethics, the English case is not far from the point. The party raising an objection must produce some evidence and establish the relationship and the nature of the relationship and extent of relationship. The facts produced in evidence must speak for themselves without the court shifting through any flimsy evidence to determine whether any conflict does exist or may exist or may occur.

On the evidence before me the relationship alleged, the nature of the relationship and the extent of that relationship have not been established to my satisfaction. Instead there are innuendoes and suggestions. Having said that of course if Mr Powaseu has some personal knowledge of anything arising from the innuendoes and suggestions in the light of the Lawyers Rules of Conduct, he may decide to withdraw and his firm may appoint a different lawyer to take over the conduct of the case.

On the evidence however the objection cannot be sustained. I therefore dismiss it with costs.

Lawyers for plaintiffs: Lomai & Lomai Attorneys at Law.
Lawyers for defendants: Carter Newell Lawyers.