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Chong v Chuan [1998] PNGLR 257 (18 June 1998)

[1998] PNGLR 257

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

PATRICK CHONG, LIMSENG CHUAN, PETER LING KOH WOO

V

DATUK JAMES HWONG YOU CHUAN, LAURENCE KOK BOON SHIN, CHONG KONG FUEL, CHONG KIEW FONG

WAIGANI: WOODS J
18 June 1998

Facts

On an application for interlocutory relief sought by the defendants’ lawyers under Order 2 Rule 34 of the National Court Rules for the leave of court to appear for the defendants, the plaintiff’s lawyer raised objection. The objection was raised on the basis that before the plaintiffs briefed the matter to the lawyers who instituted the substantive action the first named plaintiff approached the defendant’s lawyers seeking advice on the same matter. The advice sought related to a purported meeting of a company of which both the plaintiffs and defendants are directors and shareholders. The substantive proceedings were instituted seeking orders pertaining to that meeting of the company.

Held

1. There is no general rule that a solicitor who had acted for some person either before or after litigation began could not act for the opposite side; the court must be satisfied in each case that mischief would result from his doing. Australian Commercial Research and Development Ltd v Hampson [1991] 1 Qd R 508, Supasave Retail Ltd v Coward Chance & Ors [1991] 1 All ER 668, Re A Firm of Solicitors [1992] All ER 353 and Rakusen v Ellis, Munday & Clarke [1912] UKLawRpCh 47; [1912] 1 Ch 831, considered.
   
2. Number of matters listed in the above case of Hampson should be considered although they relate to confidentiality and its use and appearance that could be drawn. Australian Commercial Research and Development Ltd v Hampson [1991] 1 Qd R 508, distinguished.
   
3. Whilst there is always a possibility of a forgotten piece of confidential information suddenly surfacing, the likelihood that that could happen here is so slight. The matter on which advice was sought was generally of public knowledge within the company the parties are concerned with.
   
4. The courts must balance matters referred in this case and the right of freedom of association and employment allowed by the Constitution ss 47 and 48 to ensure that a lawyer deserted by party is not absolutely restricted from advising and acting for other persons.
   

Cases cited

Australian Commercial Research & Development Ltd v Hampson [1991] 1 Qd R 508.

Rakusen v Ellis, Munday & Clarke [1912] UKLawRpCh 47; [1912] 1 Ch 831.

Re A Firm of Solicitors [1992] 1 All ER 353.

Supasave Retail Ltd v Coward Chance & Ors [1991] 1 All ER 668.

Counsel

E Anderson, for the plaintiffs.
G Sheppard, for the defendants.

18 June 1998

WOODS J. The lawyer for the defendants has applied under the National Court Rules Order 2 Rule 34 for the leave of the court to appear for the defendants in this matter. It appears that before the plaintiffs briefed the firm of lawyers, which has issued the originating summons on their behalf the first named plaintiff had approached the firm who now appears for the defendants for advice on the matter. These proceedings are seeking certain orders pertaining to a purported meeting of a company of which both plaintiffs and defendants are directors and shareholders. The advice sought was in relation to a purported meeting of the company and whether the meeting had been called correctly and was therefore a valid meeting under the Companies Act and under the Memorandum and Articles of Association of the Company.

The lawyer for the plaintiffs had raised this matter when an application for certain interlocutory relief was to be sought and so the lawyer for the defendants has made this application. Apparently he had sought a ruling from the Law Society on this matter but a ruling had not yet been received and the substantive matters could not be delayed. There has been a long standing principle that courts should take a cautious approach to allowing a lawyer to act where confidential information is communicated, where that information is relevant to current litigation, and the information is still available to the lawyer.

The broad principles to be considered in such a situation are firstly whether the confidentiality of a client with his lawyer could be breached, and whether there is a probability that real mischief could result. It has been pointed out to me that there have been different standards applied where the matter involves solicitors and barristers where there are two professions. The court has applied a stricter standard in the situation of a barrister as against a solicitor. I have considered the cases of Australian Commercial Research and Development Ltd v Hampson [1991] 1 Qd R. 508, and Supasave Retail Ltd v Coward Chance & Ors [1991] 1 All ER 668, and Re a Firm of Solicitors [1992] 1All ER 353, and Rakusen v Ellis, Munday & Clarke [1912] UKLawRpCh 47; [1912] 1 Ch 831. The general principle has been as briefly stated in the Rakusen case that there was no general rule that a solicitor who had acted for some person either before or after litigation began could in no case act for the opposite side; the court must be satisfied in each case that mischief would result from his so acting. In the Hampson case above the Judge listed a number of matters that should be considered but broadly they relate to confidentiality and use that could be put to it and the appearance that could be drawn.

In the matter before me to-day I am satisfied that there has been no long term situation of confidentiality involved, and whilst there is always a possibility of a forgotten piece of confidential information suddenly surfacing the likelihood that that could happen here is so slight as the matter on which advice was sought was generally of public knowledge within the company the parties are concerned with. I must balance these matters with the right of freedom of association and employment allowed for in the Constitution. If a party wishes to start briefly with one lawyer and then desert him for another that should not absolutely restrict that lawyer from giving advice and acting for other persons.

I am satisfied that there will be little likelihood of any mischief or breach of confidential information in this situation and I grant leave to Mr Sheppard and the firm to which he belongs to act for the defendants in this matter.

Lawyer for the plaintiff:
Lawyer for the defendants: